"But It's in a Trust": The Asset-Protection Comfort Blanket That Caldwell & Caldwell Just Pulled Loose
- Ross Moschella
- Jun 26
- 5 min read
The Full Court's decision in Caldwell & Caldwell [2026] FedCFamC1A 81 is a pointed reminder that a family trust is only as protective as the way its control is arranged — and that "it's not really mine" is a harder line to run than many trust owners assume.
Few phrases give a business owner more comfort than "it's in a trust." It has the reassuring ring of a locked vault — assets tucked safely beyond the reach of creditors, the Commissioner, and that perennial favourite, a former spouse. The Full Court's decision in Caldwell & Caldwell [2026] FedCFamC1A 81 (11 May 2026) is a timely reminder that the vault may be considerably less locked than its owners imagine — and that the key, more often than not, is control.
What happened
The Caldwell family had done everything you would expect of careful, old-money planning. Three discretionary trusts, established by the husband's late father, held wealth built up over four generations of the family business. The trust deeds restricted benefits to lineal descendants and pointedly excluded spouses — the wife had been an excluded beneficiary since 2019. The husband had never received a distribution, before or after separation.
When the marriage ended, the wife sought a declaration that the trusts (or their assets) were the husband's "property" for the purposes of section 79 of the Family Law Act 1975 (Cth) - which would draw them into the pool available for division. The husband's response: his father built it, four generations built it, he had never taken a cent, and the deeds shut his wife out.
At first instance, Carew J agreed and found the trusts were not property of the parties (Caldwell & Caldwell [2025] FedCFamC1F 506). On appeal, the Full Court (Christie, Strum and Brasch JJ) disagreed — by majority — and set that finding aside.
The two-question discipline (and why the husband lost)
The majority's central point was deceptively simple. There are two separate questions, and they must be answered in order:
Are the trust assets "property" of a party at all? "
Property" is defined in s 4(1) of the Act, in essence, as property to which a party is entitled, whether in possession or reversion.
If so, should the court adjust the parties' interests in it - and by how much?
That is the discretionary exercise now codified in s 79 of the Act.
The primary judge, the majority held, had run the two together, allowing reasons why it would be unfair to hand trust money to the wife (the generational origins, the family-business purpose, the absence of past distributions) to answer the prior question of whether the assets were property in the first place. Those are considerations for the second question, not the first.
On the first question, the touchstone was control. The husband held the A-class shares and preferential voting rights in the corporate trustees, under the deeds only the first-named joint shareholder votes (which was him), together with the power to remove and appoint trustees and to remove his two adult sons as co-appointors. That, the majority found, gave him effective control of the trusts.
The husband's best argument was that he could take control but simply hadn't gotten around to actually doing so. The Full Court was unmoved. The question is whether the power can be used, not whether it has been. As the Court put it, it:
"is not necessary for the husband to have taken the action necessary to assume control."
Procrastination, it turns out, is not an asset-protection strategy.
This is not a new idea; it's the principle the High Court grappled with in Kennon v Spry (2008) 238 CLR 366, where assets of a controlled discretionary trust were held to fall within the reach of s 79. Caldwell simply applies it with uncomfortable clarity.
The asset-protection features that didn't save the day
For anyone who has paid good money to build a "bulletproof" structure, the list of things that did not prevent characterisation as property makes sobering reading:
The wealth was generational, built largely by earlier Caldwells rather than by the couple.
The trusts' stated purpose was to keep the family business in the family.
The deeds restricted benefits to lineal descendants and excluded spouses.
The husband had never received a distribution.
Each may yet matter - but only to the second question (contributions and what, if anything, is fair), not the first. None of them stopped the trust assets being 'property'.
The silver lining (such as it is)
Before anyone restructures their entire affairs over the long weekend, some perspective. Being labelled "property" is not the same as being handed over. The majority was at pains to keep the two questions apart: characterising the trusts as the husband's property does not mean the wife will receive a cent from them. That is the separate, and still unresolved, second question, which has been remitted for determination.
The majority also accepted that there will be cases where genuinely generational wealth is not property of the parties — this simply was not one of them. And Strum J dissented, a useful reminder that reasonable judicial minds continue to differ on exactly where the line sits. The door is not bolted shut; it is just no longer the reassuring brick wall many had assumed.
Why this matters well beyond the divorce court
It would be a mistake to file Caldwell under "family law" and move on. Its reasoning is about how control is allocated in a discretionary trust — which is the beating heart of most family-business succession and estate plans. The same logic applies to de facto couples under s 90SM (the mirror of s 79), so "we never actually married" is no defence either.
It also lands at a pointed moment. The recently commenced Family Law Amendment Act 2024 (Cth), in force from 10 June 2025, codified the s 79 decision-making framework on the face of the legislation (and put the economic effect of family violence squarely within it, in s 79(4)(ca)). That codified "identify the property first, adjust second" structure makes the discipline in Caldwell more pointed, not less.
What prudent trust owners should actually do
Understand who really controls your trusts. Not just the trustee, but the appointor or guardian who can hire and fire the trustee, and the voting mechanics buried in any corporate trustee's constitution. If one person can take the wheel at any time, the law may treat them as already holding it.
Consider whether genuine independence reflects your intentions — an independent trustee or appointor changes the analysis, though independence carries its own trade-offs and is not a step to take lightly.
Resist the urge to "fix" it overnight. Re-arranging a trust to put assets beyond reach can carry real tax and duty consequences — and a disposition made to defeat a claim can be set aside by the court under s 106B of the Family Law Act. The cure can be more expensive than the disease.
If separation is actually on the horizon, get specialist family law advice early. The structuring conversation and the litigation conversation are different conversations.
Talk to us
At Ellison Moschella & Co we advise business owners and families across Queensland on trust structuring, business succession and estate planning. If your wealth sits in a family trust — and especially if "it's in a trust" has quietly been doing the heavy lifting in your asset-protection plan — it is worth a conversation about how that structure would actually hold up under pressure.
This article is general information only and is not legal advice. It does not take into account your particular circumstances. Caldwell & Caldwell turns on its own facts, the law in this area is developing, and the proceedings themselves remain on foot. Please obtain tailored advice before acting.
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