By Catherine Heath, Principal Solicitor, Consort Family Law | Published: June 2026
Catherine Heath is the Principal Solicitor at Consort Family Law, a boutique family law firm in North Sydney. She has practised exclusively in family law for over 25 years. She regularly advises clients on complex property settlements involving family trusts, discretionary trusts, and multi-generational business structures.
Key takeaway:
In Caldwell & Caldwell [2026] FedCFamC1A 81, Australia’s appellate family court ruled that three discretionary trusts were the husband’s property under section 79 of the Family Law Act 1975. The trusts held four generations of family business assets. The decision turns on effective control — and it matters to anyone whose wealth sits in family trusts.
When a marriage ends, most people think about the house, the savings accounts, and the car. But what happens when the real family wealth is held in family trusts? What if those trusts date back generations — long before the couple ever met?
That is the question at the heart of Caldwell & Caldwell. The case reached the Federal Circuit and Family Court of Australia’s appellate division in May 2026. It produced a split decision. And it has real implications for the law on discretionary trusts and divorce.
The Background: A Family Business Across Four Generations
The Caldwell family had run a business since the early 1900s. (“Caldwell” is a court-approved pseudonym.) The husband’s great-grandfather started it. His grandfather continued it. His father took over and placed the business assets into three discretionary trusts — the B Trust, the C Trust, and the D Trust.
The husband worked in the business his whole adult life. He was well paid for it. He and his wife also built up personal assets outside the family trusts — somewhere between $16 million and $22 million.
The couple separated in early 2022. Later that year, the husband’s father died. The husband then inherited shares in the trustee companies. He became a joint appointor of all three family trusts, alongside the couple’s two adult sons.
The wife asked the court to declare those discretionary trusts as the husband’s property. She relied on section 79 of the Family Law Act 1975.
Why This Matters: What Is Section 79?
Section 79 lets a court adjust property interests on divorce. But first, the court must decide what counts as “property.”
In family law, “property” has a wider meaning than most people expect. Courts have found over many decades that assets in family trusts can count as a spouse’s property. The key requirements are control over the trust and the ability to receive a benefit from it.
The wife’s argument in Caldwell & Caldwell was straightforward. The husband controls these discretionary trusts. He can benefit from them. The assets should be on the table.
The husband disagreed. His father set up these family trusts. Four generations built the assets. He never received a single distribution — during the marriage or after. They are not his.
What the Primary Judge Decided — and Why the Wife Appealed
The primary judge sided with the husband. They found the family trusts were not his property under section 79.
Their reasoning covered several grounds. The husband’s father and earlier generations built the trust assets, not the husband and wife during their marriage. The purpose of the discretionary trusts was to keep the Caldwell business in the Caldwell family’s hands. Specifically, the assets were for direct descendants of the husband’s father. The wife had become an excluded beneficiary in 2019. She could not receive any benefit from the trusts.
The primary judge also noted a side agreement the husband made with the couple’s sons during the litigation. He essentially promised not to remove them as co-appointors once proceedings ended. To the primary judge, this showed he did not intend to exercise unilateral control.
The wife appealed.
The Appellate Court: A Divided Bench
Three judges heard the Caldwell & Caldwell appeal. The majority — Christie J and Brasch J — allowed it. Strum J dissented.
What the Majority Said
The majority found that the primary judge made a critical error. They conflated two separate questions.
The first question: Are the family trust assets the husband’s property? The second question: should those assets be divided in a property settlement? These are distinct steps. The primary judge ran them together.
The primary judge focused heavily on why it would be wrong to make the husband pay the wife from the trust funds. The majority said none of that was relevant yet. The only question was whether the assets were property in the first place.
The Key Factor
The key fact was control. The husband holds the A class shares in all three trustee companies — and his name appears first on the register. Under the trust deeds, only the first-named joint shareholder votes at a general meeting. The husband can also remove his sons as co-appointors at any time. He needs no consent. He needs to give no reasons.
That means effective control. Effective control, combined with the power to distribute trust assets to himself, makes the family trusts his property under section 79.
The majority also rejected the proper purpose argument. The trust deeds permit the husband to benefit himself. Using those powers for his own benefit cannot be improper. If the deeds prevented him from self-benefiting, the answer might be different. They do not.
The majority dismissed the relevance of the father’s will and codicil. Documents created after a discretionary trust is established cannot redefine its purpose. The codicil came decades after the first trust was created.
The side agreement with the sons was also irrelevant. Whether the husband intends to exercise his removal power is a separate question from whether he has it. He has it today. That is what matters.
The majority in Caldwell & Caldwell declared all three trusts to be the husband’s property under section 79.
What the Dissent Said
Strum J reached the opposite conclusion. He would have dismissed the appeal.
His starting point was Kennon v Spry — the High Court’s landmark trust case. Strum J said the majority read that decision too broadly. Control and the capacity to self-benefit are necessary conditions. But they are not sufficient on their own. The full picture matters.
The full picture here pointed away from treating the family trusts as the husband’s property. Four generations built the business, not the husband and wife. The husband never took a single distribution. The discretionary trust assets had no connection to the couple’s contributions to each other’s lives. The wife could not even receive a benefit.
Strum J also focused on what the wife was actually asking for. She was not asking the court to recognise an existing property interest. She was asking the court to compel the husband to seize control — to remove his sons, override his father’s wishes, and create a property interest that did not yet exist. That is not what section 79 is for.
He gave weight to the father’s wishes, too. The codicil to the father’s will made his intentions clear. The Caldwell business should stay under the joint control of the husband and the two sons. Forcing the husband to override that was something the court should not sanction.
So, What Does Caldwell & Caldwell Mean?
The wife won the appeal. The family trusts are now declared the husband’s property. That does not mean she automatically gets a share — that question returns to the trial judge. But the trust assets are now on the table.
The deeper significance of Caldwell & Caldwell is this: discretionary trust cases in family law are intensely fact-specific. There is no simple formula. Two judges said these family trusts are property. One judge said they are not. The law is genuinely unsettled. That creates real uncertainty for anyone whose wealth sits in trust structures.
Is a family trust at stake in your separation? The law in this area is complex and the facts of your case matter enormously. Contact Consort Family Law in North Sydney for a confidential consultation — call (02) 7252 0444.
What This Means if Your Family Has Trusts
Separating with family trusts in the picture? Here is what Caldwell & Caldwell tells you to think about. If you are just starting out, it also helps to understand how divorce works in Australia before diving into trust issues.
Does one spouse have effective control? Courts ask whether one spouse controls the trustee and can direct benefits to themselves. If yes, assets in discretionary trusts can come onto the table — even if someone else built them.
Where did the assets come from? Many judges consider the origins of the trust assets. A trust built from marital contributions is treated very differently from multi-generational family wealth. Caldwell & Caldwell split precisely on that tension.
Does intent matter if the legal power exists? The husband had no intention of seizing sole control of the family trusts. He had agreed with his sons not to remove them. The majority said none of that matters if the legal power exists. That is a strict and important principle.
Will other beneficiaries protect the trust? The sons, other family members, the father’s wishes — none of it stopped the majority declaring the family trusts to be the husband’s property. Third-party interests may factor in later. They do not block the initial property finding.
Family wealth and family law make an uncomfortable combination. Caldwell & Caldwell is a vivid reminder of why.
Frequently Asked Questions
Can family trust assets be included in a divorce property settlement in Australia?
Yes, in some circumstances. Under section 79 of the Family Law Act 1975, a court can treat family trust assets as a spouse’s property. The spouse must have effective control and the ability to receive a benefit. Caldwell & Caldwell confirms that effective control — even unexercised — can bring trust assets into the property pool.
What does “effective control” of a discretionary trust mean in family law?
Effective control means the spouse can determine who acts as trustee and direct distributions to themselves. In Caldwell & Caldwell, the husband had effective control through his sole voting right on the A class shares. He could also remove his co-appointors unilaterally — even though he had not done so.
Does it matter that previous generations built the trust assets?
It can matter significantly. The dissenting judge gave great weight to this. Four generations of the Caldwell family built the business, not the husband and wife. The majority held, however, that asset origins are relevant to what orders get made — not to whether the trust is property in the first place. This remains a contested area of law.
What is the difference between trust assets being “property” and being a “financial resource”?
Property can be directly divided in a settlement. A financial resource cannot — but courts take it into account when assessing fairness. The primary judge in Caldwell & Caldwell classified the trusts as a financial resource only. The majority on appeal disagreed. The distinction matters enormously to the final outcome.
What should I do if my spouse controls a family trust or a discretionary trust?
Get legal advice early. Trust structures are complex. The trust deeds, the appointors, the history of distributions, and the origin of assets all affect the outcome. A specialist family lawyer can assess whether the trust assets are likely to be treated as property and advise on your options. You may also want to understand the cost of divorce in NSW before you begin.
This article is general information only and is not legal advice. If you are facing a property dispute involving family trusts or discretionary trusts, contact Consort Family Law in North Sydney for a confidential consultation — call (02) 7252 0444.
Sources and further reading:
- Caldwell & Caldwell [2026] FedCFamC1A 81 (11 May 2026)
- Kennon and Spry | High Court
- Section 79 of the Family Law Act
