For decades, family trusts have been regarded as one of the cornerstones of wealth preservation in Australia’s agricultural and agribusiness sectors. Carefully established by parents and grandparents, these structures have protected family farms, businesses and investments from commercial risk while ensuring wealth passes from one generation to the next.
One assumption has underpinned many of those structures: if the assets were created long before a relationship began, held within a discretionary trust, and never contributed to by a spouse, they would remain insulated from a family law property settlement.
The Full Court’s decision in Caldwell & Caldwell [2026] FedCFamC1A 81 challenges that assumption.
Not because the law has suddenly abandoned the protection of family wealth but because the Court has reminded us that, in family law, control can be just as important as ownership.
The Case That Has Family Lawyers Talking
The facts of Caldwell were remarkable.
Three discretionary trusts held the wealth of a family business that had been built over four generations. None of the trust assets had been accumulated during the marriage. Neither the husband nor the wife had contributed to their creation. The couple already possessed personal assets worth between $16 million and $22 million, separate from the trusts, and the trust deeds specifically excluded the wife as a beneficiary.
At first instance, the Court accepted what many would have expected, that the trusts represented intergenerational family wealth rather than property belonging to the husband.
On appeal, however, the Full Court took a different view.
The majority held that the critical question was not where the wealth came from, nor who had built it. Instead, the focus shifted to who had the power to control it.
Because the husband held the sole voting shares in each trustee company and possessed the practical ability to influence the operation of the trusts, the Court concluded that the trust assets could be characterised as his property for the purposes of the Family Law Act.
In other words, the Court looked beyond legal title and examined the reality of the husband’s influence over the trust structure.
A Shift from Ownership to Control
Historically, lawyers may have advised clients that discretionary trusts are separate legal entities and that trust assets are not necessarily the personal property of beneficiaries.
That proposition still holds true.
What Caldwell reinforces, however, is that the Court will not stop at the trust deed. It will examine the practical operation of the structure. If an individual has the power to appoint or remove trustees, control trustee companies or effectively determine how trust assets are dealt with, those powers may carry significant weight in family law proceedings.
This represents an important shift in emphasis.
The question is no longer simply, “Who owns the assets?”
Increasingly, the question is, “Who controls the decisions?”
For families whose businesses and investments have been carefully structured over generations, that distinction could prove critical.
Is Generational Wealth Still Protected?
Not necessarily, but nor is it automatically exposed.
One of the most important aspects of the Caldwell decision has received far less attention than the finding itself.
The Full Court was careful to distinguish between two separate questions.
- Whether trust assets form part of the property pool available for consideration under the Family Law Act.
- Whether those assets should ultimately be divided between the parties.
Those are very different enquiries.
The fact that trust assets are characterised as “property” does not mean the Court will order that they be shared. Matters such as the source of the wealth, the contributions of previous generations, the interests of other beneficiaries and the purpose for which the trust was established remain highly relevant when determining what outcome is just and equitable.
However, once trust assets are capable of entering the property pool, the dynamics of a case change significantly.
Negotiations change.
Risk assessments change.
Settlement strategies change.
Commercial leverage inevitably shifts when a multi-generational trust becomes part of the conversation rather than something assumed to be untouchable.
Caldwell Is Already Influencing the Courts
The significance of Caldwell became apparent almost immediately.
Within weeks of the judgment, the decision was applied in Daeira & Diamanda [2026] FedCFamC1A 98, where the Court confirmed that “property” under the Family Law Act extends beyond traditional legal ownership.
The Court accepted that a combination of legal rights and practical control over discretionary trusts may be sufficient for trust-held assets to be treated as property for family law purposes.
It is an early indication that Caldwell is likely to shape how future disputes involving trusts, family businesses and complex financial structures are argued.
The Questions Families Should Be Asking
For many families, Caldwell is a reason for reflection.
Families with discretionary trusts, farming enterprises, family companies or long-standing investment structures should be asking themselves some important questions:
- Who actually controls the trust?
- Are trustee and appointor powers concentrated in one individual?
- Does the structure genuinely reflect the family’s succession intentions?
- Could the trust withstand scrutiny in family law proceedings?
- Is a Binding Financial Agreement an appropriate additional layer of protection?
These conversations are often most valuable before any relationship difficulties arise.
Looking Beyond the Trust Deed
The real lesson from Caldwell is that asset protection is no longer simply about having the right legal structure.
It is about understanding how that structure operates in practice.
A trust deed drafted decades ago may have been perfectly suited to the legal landscape at the time. Today’s environment demands consideration of governance, control, succession planning and family law risks together.
For farming families, business owners and those responsible for preserving intergenerational wealth, the question is no longer whether you have a trust.
The more important question may be whether your trust still provides the protection you believe it does.
