Understanding control, beneficial interest and the significance of Caldwell & Caldwell [2026] FedCFamC1A 81. Family trusts have long been used in Australia to preserve wealth across generations, protect assets and manage tax outcomes. But when a relationship breaks down, the question becomes sharper: can trust assets be treated as “property” in family law proceedings? The Full Court’s decision in Caldwell & Caldwell reshaped the answer. It puts the spotlight on who controls the trust and who can benefit from it.
The Full Court in Caldwell & Caldwell made it clear that the key question is not simply who legally owns the trust assets. It is who effectively controls the trust, and whether that person can benefit from it.
This moves away from older assumptions that carefully drafted trust deeds, especially those that exclude spouses, could reliably shield trust assets from property settlements.
The Court emphasised two separate questions:
These questions must be answered separately. The first is about identifying property. The second is about fairness and the Court’s discretion to adjust.
In Caldwell & Caldwell, the husband argued that the trusts were not his property because:
At first instance, the trial judge accepted this reasoning and found the trusts were not property of the marriage. On appeal, the Full Court overturned that decision.
The Court found that the husband had effective control because:
Crucially, it did not matter that he had never used these powers. What mattered was that he could.
This principle, that a present ability to control is enough, is now central to deciding whether trust assets may be treated as property.
The Court also considered whether the husband had the capacity to benefit from the trust. Even though he had not received distributions, the trust deed allowed him to be a beneficiary. That capacity, combined with control, meant the trust assets were properly treated as his property under section 79 of the Family Law Act 1975 (Cth).
The Caldwell decision is a wake-up call for families relying on discretionary trusts to protect wealth. It highlights that:
As one commentary put it , the decision marks “the end of the untouchable bloodline trust” where a spouse has both control and the capacity to benefit.
Caldwell & Caldwell is now a leading authority on how family trusts are treated in Australian family law. The decision confirms that control and capacity to benefit are the main considerations when deciding whether trust assets form part of the property pool.
For families with significant wealth held in discretionary trusts, this case shows the importance of thoughtful structuring, careful succession planning and early legal advice, long before a relationship breakdown becomes a possibility.
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