Here is something that comes up often in first appointments. A person sits down, takes a breath, and says: “The assets are in the trust, so my ex can’t touch them. ” They believe it genuinely. And the first thing they need to hear is that it isn’t that simple.
A family trust can be structured in ways that genuinely affect a property settlement. But it is not a legal wall. The Federal Circuit and Family Court of Australia has spent decades developing tools to look at what a trust actually does, who actually controls it, and who actually benefits from it. The label on the structure matters far less than the Court thinks it should.
Most people who set up a family trust do so for sound reasons: tax planning, asset protection from commercial creditors, succession. Those are legitimate purposes. But “protection from a future spouse” is a different kind of protection, and the Court approaches it differently.
So where does that leave you? It depends on a set of facts specific to your trust: who controls it, what it owns, how it was used during the relationship, and whether the other party has genuinely benefited from it over the years.
By the end of this article, you’ll be able to assess where your trust is likely to sit in that analysis, and what you should do next.
Key Takeaways
- A family trust is not automatically excluded from a property settlement. The Court looks at substance, not structure.
- Control is the central question. If you can effectively direct the trust and access its assets, the Court may treat those assets as yours.
- Trust assets can be treated as property or as a financial resource. Both affect your outcome, but in different ways.
- A trust established before the relationship, or by a third party, may be treated differently. Timing and genuine independence matter, but neither is an automatic shield.
- Transferring assets into a trust after separation will not protect them. Courts scrutinise post-separation transactions closely.
- Time limits apply. Married couples generally have 12 months from divorce, and de facto couples generally have two years from separation, to bring a property settlement claim. Get advice on your specific situation.
Can a family trust protect assets in a separation?
Sometimes, partially, and only in specific circumstances. That is the honest answer.
A discretionary trust is not your property in the strict legal sense. You don’t own the assets in it the way you own a car or a bank account. But the Court doesn’t stop its analysis at the legal ownership question. It asks a deeper one: can you, in practice, access those assets, direct those assets, or benefit from them whenever you choose?
If the answer is yes, the Court has consistently found ways to bring trust assets into the picture, either by treating them as part of the property pool or by treating the trust as a financial resource that adjusts the settlement in the other party’s favour.
The most common mistake people make is conflating legal ownership with practical reality. A trust deed might say you’re just one of many discretionary beneficiaries. But if you’re also the trustee, and the appointor, and the only person who has ever received a distribution, the Court is going to have a hard time treating that trust as something separate from you.
Key Point: The structure of a trust matters. But what the Court really examines is whether the trust has functioned, in practice, as an extension of one party’s financial life.
When can trust assets be included in the property pool?
The property pool in a family law settlement includes assets and liabilities that belong to either party, whether held in their own name or through an entity they effectively control.
A trust asset may be drawn into the pool where a party:
- Is the trustee and has full discretion over distributions and investment decisions
- Is the appointor and can remove and replace the trustee at will
- Controls the trustee company through share ownership or directorship
- Has historically received all or most distributions from the trust
- Has used trust assets as if they were personal assets, paying personal expenses, drawing income freely, or living in trust-owned property
Where those conditions exist together, the Court may find that the trust assets are, in substance, the property of that party. The Kennon v Spry decision in the High Court of Australia is the clearest authority for this position: a husband who was both trustee and appointor was found to have effective control, and the Court attributed the trust assets to him accordingly.
You don’t need all of those factors present. The Court weighs them in combination. But the more of them that apply, the harder it becomes to argue the trust is genuinely separate from you.
Expert Tip: Check who holds the appointor role in your trust deed. It is often more powerful than the trustee role, because the appointor can remove and replace the trustee. Many people don’t realise this until their settlement is already underway.
How does the Court decide who controls a family trust?
Control is not just about whose name is on the trustee line. The Court will look at the full picture of how the trust has actually operated.
It will examine:
- Who signed resolutions and distribution minutes over the years
- Who gave instructions to the accountant
- Who the bank regarded as the decision-maker on trust accounts
- Who lived in any trust-owned property, and on what terms
- Whether distributions followed any pattern that reflected one party’s preferences
A trustee on paper who never actually made a decision will carry less weight than a person who made every financial call in practice, even if they weren’t formally documented as doing so.
This is why record-keeping matters enormously. If you are trying to establish that the trust is genuinely independent of you, the evidence needs to show that. If your former partner is trying to establish that you controlled it throughout, their lawyer will be looking at exactly the same records.
Key Point: Courts look at conduct over years, not just the current trust deed. What happened in practice is usually more telling than what the documents say should happen.
What is the difference between trust property and a financial resource?
This distinction has real consequences for what you end up with.
Where the Court treats trust assets as property, they go into the pool and are divided. If the trust holds a $1.5 million investment property and the Court finds you control the trust, that $1.5 million is in the pool.
Where the Court does not treat the trust assets as property, but finds that you have a real prospect of benefiting from the trust in the future, the trust becomes a financial resource. It doesn’t go into the pool. But the Court adjusts the settlement percentages to account for the fact that you have access to that resource.
In practical terms: if you have a $600,000 property pool and the Court finds your former partner has a trust from which they receive significant income, the Court might adjust the split to give you 60% rather than 50%. Your former partner keeps their interest in the trust, but you receive a larger share of what is in the pool.
Neither outcome is neutral. The financial resource finding can substantially affect what you receive, even where the trust assets themselves are never directly divided.
Expert Tip: Don’t assume that if the trust isn’t “property”, it won’t affect your settlement. A financial resource finding can move the percentages meaningfully, particularly in a pool of modest size.
Can a discretionary trust be treated as my property?
It can, and the Court has found this in cases where effective control was clear.
A discretionary trust gives the trustee a wide discretion over who receives distributions and when. In theory, no beneficiary has a right to anything. But where you are both the trustee and the appointor, that theoretical discretion is, in practice, entirely yours. You decide who gets what. You could decide to give yourself everything, legally, at any point.
The Court recognised in Kennon v Spry that where a husband exercised effective control of a discretionary trust as both trustee and appointor, the trust assets could be treated as his property for settlement purposes.
The same analysis applies to you if you hold those roles. And it applies in reverse if your former partner holds them.
Key Point: Being a discretionary beneficiary, without control, is a weaker position than being the trustee or appointor. But regular distributions over many years can still affect how the Court assesses your financial resources.
What evidence will the Court examine about the family trust?
The Court will want to see the full history of the trust, not just the current documents. Gather everything you can, as early as you can.
The documents that matter most include:
- The original trust deed and all subsequent amendments
- The names of all current and historical trustees, appointors and beneficiaries
- Annual financial statements for the trust
- Tax returns for the trust, going back several years
- Distribution resolutions and trustee minutes, year by year
- Bank account statements for all trust accounts
- Records of any trust loans to or from beneficiaries
- Correspondence between the trustee and the accountant or financial adviser
- Company registers if the trustee is a corporate entity
If you don’t have access to these documents and your former partner controls the trust, your lawyer can take steps to obtain them. In some cases, court orders can compel disclosure. Don’t assume that because you can’t find the documents, the Court can’t get to them.
Expert Tip: Start building your document file now. The person who arrives with organised records is in a materially stronger position than the person who has to reconstruct the history from scratch under time pressure.
Can the Court look through a family trust?
Yes. It can and does.
The Court doesn’t treat a trust structure as a closed box. Where it is satisfied that the trust is, in substance, an extension of one party’s financial affairs, it will look through the structure to the underlying assets.
This doesn’t happen automatically. The party seeking to have trust assets included in the pool needs to build a case around control, benefit and history. But the legal tools exist, and courts have used them consistently.
What tends to happen in practice is that the Court examines the full picture and asks: if this trust didn’t exist, would that party simply own these assets outright? Where the answer is effectively yes, the outcome will often reflect that reality.
Key Point: The trust deed creates the legal structure. The Court looks at the financial reality underneath it.
What happens if the family trust was created before the relationship?
It’s relevant, but it’s not a complete answer.
A trust established well before the relationship began may carry more weight as a separate, pre-existing structure. The initial assets it held can sometimes be treated similarly to pre-relationship property, particularly where they were clearly separate and not contributed to by the other party.
But timing alone does not insulate a trust. If the other party made contributions to the trust’s assets during the relationship, whether financially, through unpaid work in a trust-run business, or through homemaking that freed up the trustee’s time and income, those contributions are relevant. The Court will look at what happened during the relationship, not just when the trust was formed.
A trust started before the marriage that grew substantially through joint effort during a 15-year relationship is in a very different position from a trust that remained entirely separate throughout.
Key Point: Pre-relationship trusts get scrutiny, not immunity. What matters is how the trust functioned during the relationship, who contributed to it, and who benefited from it.
What if the trust was established by my parents or another third party?
Genuine third-party control is one of the more effective forms of protection in this area.
Where a trust was established by your parents, or by another independent person, and that person remains the trustee and appointor with genuine decision-making power, the trust assets are less likely to be treated as yours. You might be named as a beneficiary. But if the trustee truly has an independent discretion, you don’t control whether you receive anything.
The key word is genuine. Courts look closely at whether the third-party control is real or nominal. If your parent is technically the trustee but has always followed your instructions, that independence won’t hold up.
Where genuine independence is established, the trust may still be considered a financial resource if there is a real likelihood you will benefit from it in the future. But it is less likely to be treated as your property outright.
Expert Tip: If your parents’ trust is involved in your settlement, independent legal advice about the trustee’s actual role and conduct is important. A statutory declaration from your parents won’t be enough on its own.
Do trust distributions count in a property settlement?
Distributions that were received during the relationship are already gone, in the sense that they were income spent. But the pattern of distributions matters.
Where trust distributions have been the primary source of household income, the Court takes that into account when assessing each party’s financial contributions and future financial resources. If you’ve been living primarily on trust income for years, and that income is likely to continue after separation, the Court will want to know.
Past distributions also give the Court a clear picture of who was actually benefiting from the trust and in what amounts. A trust that distributed $80,000 a year entirely to one spouse, year after year, tells a story about practical control and benefit.
Key Point: Distribution records are evidence. They show who controlled the trust, who benefited from it, and what each party’s financial resources are likely to look like going forward.
Can trust loans and unpaid present entitlements affect the asset pool?
Yes, and this is an area that catches people off guard.
Trust loan accounts, also called unpaid present entitlements or UPEs, arise when a trust resolves to distribute income to a beneficiary but doesn’t actually pay the cash. The amount sits in the trust’s accounts as an amount owed to that beneficiary.
If your trust has accumulated significant unpaid present entitlements in your favour, that amount may be treated as an asset belonging to you. Equally, if you have borrowed money from the trust and that loan appears on the financial statements, it may be treated as your liability.
Trust loan accounts can involve very large sums, particularly in businesses that have traded through a trust for many years. They need to be examined carefully, and they can shift the overall picture significantly.
Expert Tip: Ask your accountant to confirm whether any unpaid present entitlements exist in your trust. This is one of the most commonly overlooked items in a trust-related property settlement.
What happens to the family home held by a trust after separation?
The fact that the family home is held by a trust does not, on its own, mean neither party can remain in it or that it can’t be the subject of orders.
Where a party has effective control of the trust and the trust owns the family home, the Court can make orders that affect the home. That might mean one party receiving a transfer of the property to their own name, the property being sold with proceeds divided, or other adjustments to the pool to account for the trust’s ownership.
Where the trust is genuinely independent, the situation is more complex. But even then, the practical reality that one party has been living in the property and may have minor children to house will be relevant to the overall outcome.
If you’re in the family home right now and it’s held by a trust, get advice before you assume you have to leave or that you’re entitled to stay. The position depends on who controls the trust.
Key Point: Trust ownership of the family home does not eliminate the Court’s jurisdiction to make orders about it. It changes the analysis, not the Court’s power.
Does a family trust affect what you’re entitled to in a property settlement?
Every trust involved in a relationship affects the property settlement in some way. The question is how.
Where trust assets are treated as property, they expand the pool. Where they’re treated as a financial resource, they affect the percentage split. Where past distributions funded the household, they inform the contribution analysis. Where future distributions are expected, they’re relevant to future needs.
There is no scenario in which a family trust is simply invisible. The degree to which it affects the outcome depends on its structure, its history and the evidence available.
Key Point: A trust is never irrelevant to a property settlement. The question is always how it’s relevant and in whose favour.
What happens to the children when trust assets are involved?
Parenting arrangements are dealt with separately from property settlement, but the two interact.
If the family home is held in trust and there are children who need stable housing, the Court takes that into account in considering the overall outcome. A parent who will have primary care of young children may be in a stronger position to argue for a settlement that gives them secure housing, even where the property is held by a trust.
Children’s financial needs are also relevant to spousal maintenance and to the overall assessment of what each party needs going forward. Trust income that one party has access to may reduce the argument for maintenance from that party, or increase their capacity to provide for the children financially.
Key Point: Children’s needs don’t disappear because assets are held in a trust. They remain central to the overall assessment of what a fair outcome looks like.
Separation and divorce are different. Does that matter for a trust?
Yes, and the distinction is worth understanding.
Separation is when the relationship ends. Divorce is the formal legal end of the marriage. Property settlement is a separate process from both, and it does not need to wait for divorce to be finalised.
A family trust is not automatically affected by separation or divorce. The trust continues to operate as it did before. Distributions can still be made, assets can still be managed, and the trustee retains their discretion, unless orders are made to prevent certain actions.
What separation does is start the clock running on time limits. Married couples generally have 12 months from the date their divorce is finalised to bring a property settlement claim. De facto couples generally have two years from the date of separation. Missing those deadlines can mean losing the right to claim entirely, though the Court has a limited discretion to extend them in some circumstances.
Get advice on your specific situation. Don’t assume you have more time than you do.
Expert Tip: A separation agreement or financial settlement reached before divorce is finalised is valid and enforceable. You do not need to wait for divorce to resolve the property questions, including those involving a trust.
Can I transfer assets into a family trust after separation?
This is one of the most important questions, and the answer is: don’t do it without advice, and understand that it may not achieve what you hope.
Post-separation transactions are scrutinised carefully. Where a party transfers significant assets into a trust after separation, the Court can examine those transactions and, in appropriate cases, set them aside. The Family Law Act gives the Court power to deal with transactions that were designed to defeat a property settlement claim.
Beyond the legal risk, transferring assets into a trust after separation can damage your credibility with the Court. It signals an attempt to put assets beyond reach, and courts notice.
If you’re considering this, or if your former partner has already done it, get advice immediately.
Key Point: Post-separation asset transfers into a trust are not invisible to the Court. They can be unwound, and they can affect how the Court views the party who made them.
What actually offers protection from a property settlement claim?
Genuine, independent third-party control is the most reliable form of protection.
Where a trust was established by an independent person, is genuinely controlled by that person, and distributes to beneficiaries at their true independent discretion, the trust has real structural protection. It may still be a financial resource, but it is unlikely to be treated as the property of a beneficiary spouse.
Beyond that, the structures most likely to withstand scrutiny are those where:
- The trustee and appointor are genuinely independent of both parties
- The trust history shows distributions to a range of beneficiaries, not overwhelmingly to one party
- The trust deed has not been amended in ways that give one party more control
- The trust was established for legitimate purposes unrelated to the relationship
Pre-nuptial or binding financial agreements can also provide real protection, where they are properly prepared. That’s discussed in the next section.
Key Point: Protection in the true sense comes from genuine independence of the trust structure, not from the trust label alone.
Can a binding financial agreement protect assets in a family trust?
A binding financial agreement, sometimes called a pre-nuptial agreement or BFA, can specify how trust assets are to be treated in the event of separation. Where one or both parties have interests in a family trust, the agreement can record that those interests remain with that party and will not form part of the property pool.
For a binding financial agreement to be enforceable, both parties must obtain independent legal advice before signing, and the agreement must comply with strict formal requirements under the Family Law Act.
A well-drafted binding financial agreement, made at the right time, addressing trust interests clearly, is one of the most effective tools available. A poorly drafted one, or one signed without proper advice, can be set aside.
If trust assets are a significant part of the picture and you’re entering a new relationship, or considering protecting existing assets, this is worth a serious conversation.
Expert Tip: A binding financial agreement needs to be drafted carefully, with full disclosure of trust interests on both sides. Half-measures here create the illusion of protection without the substance of it.
What should I do now if my former partner controls the trust?
Move quickly, and get organised.
Where your former partner is the trustee or appointor of a trust that holds significant assets, they have the practical ability to make decisions about those assets. Distributions can be redirected. Assets can be sold. Loans can be restructured. None of this is necessarily lawful in the context of a property settlement, but it can happen before orders are in place to prevent it.
Steps you can take now:
- Obtain copies of the trust deed, financial statements and distribution records as soon as possible, before access is restricted
- Take note of any recent changes to distributions, assets held or trustee arrangements
- Tell your lawyer about any communications that suggest assets are being moved or restructured
- Ask about urgent injunctive orders if you have reason to believe assets are being dissipated or transferred to defeat your claim
The Court has power to freeze trust assets, restrain transactions and compel disclosure. But those orders need to be sought, and they need a factual basis. The sooner you act, the more options you have.
If you’re concerned about what your former partner may do with the trust before settlement is finalised, book a confidential chat with the C + K Family Lawyers team about your situation.
Expert Tip: If you suspect assets are being moved, don’t wait. Urgent orders can be sought on short notice, but the evidence needs to be in front of a lawyer first.
How long does a family trust property settlement take?
Longer than a straightforward settlement, in most cases. Trust-related property settlements are more complex because they involve more evidence, potentially a valuation of trust assets, and sometimes separate accounting or forensic financial analysis.
Where parties reach agreement without going to court, a consent order can be sought and the process can move relatively quickly, though the trust-related documents still need to be examined carefully before any agreement is signed.
Where the matter is contested, and particularly where control of the trust is disputed, it’s realistic to expect proceedings that extend over 12 to 24 months or longer. Cases where significant trust assets are in dispute, and where forensic accounting is needed, can take longer still.
Every situation is different. The most accurate assessment of your timeline will come from a lawyer who has reviewed your specific trust documents and circumstances.
Key Point: Resolving a contested trust-related settlement takes longer than average. Getting organised early, with good documents and clear instructions, shortens the process.
How much does it cost to resolve a family trust property settlement?
It depends substantially on whether the matter is resolved by agreement or goes to a final hearing.
Trust-related matters tend to cost more than straightforward property settlements because of the additional documents, accounting involvement and, in disputed cases, the need for expert valuation evidence. Where a forensic accountant is engaged to examine the trust, their fees are an additional cost to factor in.
We don’t quote fees without understanding your situation. What we can say is that the gap between a negotiated outcome and a fully litigated one, in terms of cost, is significant. Every hour spent in court is an hour that could have been spent reaching agreement.
The practical advice is: the more organised you are, the more efficient the process. A client who arrives with the trust deed, three years of financial statements and a clear account of the trust’s history gives their lawyer a head start.
Key Point: Cost is proportional to complexity and contest. The more disputed the trust issues are, the more expensive resolution becomes. Early advice on a realistic outcome can help you make an informed decision about how hard to push.
What documents should I bring to a Gold Coast family lawyer?
Bring as much as you can. You won’t be penalised for bringing too much.
The documents that will help most in a first appointment about a trust-related property settlement include:
- The trust deed, including any amendments or variations
- The names and roles of all trustees, appointors and named beneficiaries
- Financial statements for the trust for the past three to five years
- Tax returns for the trust for the same period
- Distribution resolutions and trustee minutes
- Bank statements for trust accounts
- Any loan agreements between the trust and its beneficiaries, including yourself
- Corporate registers, if the trustee is a company
- Your own tax returns, which will show distributions you have received
- Any correspondence with the accountant about the trust
If you can’t locate all of these, bring what you have and note what’s missing. Your lawyer can advise on how to obtain the rest.
Expert Tip: If you’re unsure whether a document is relevant, bring it anyway. The most useful first appointment is one where the lawyer has enough information to give you an honest picture of where you stand.
How can C + K Family Lawyers help you assess whether a family trust protects your assets?
We work with separating people across the Gold Coast who are dealing with trust-related property questions every week. The trust questions we see vary widely: some people control their own trust, some are battling a former partner who controls theirs, and some are dealing with a parent’s trust that has become entangled in the relationship.
What we offer in a first appointment is a clear read of your situation based on the documents and instructions you bring. We’ll tell you whether the trust is likely to be treated as property or as a financial resource, what evidence will matter, and what your realistic range of outcomes looks like.
We don’t deal in false reassurance. If your trust is exposed, we’ll tell you why and what to do about it. If your former partner’s trust is shielding assets that should be in the pool, we’ll tell you what tools exist to address that.
If you’re working through a separation involving a family trust on the Gold Coast, book a confidential, no-obligation chat with our team about your specific circumstances.
Frequently asked questions
If the trust owns the family home, can I be forced to leave?
Not automatically. Your right to remain in the family home depends on a range of factors, including who has practical occupation, whether there are children, and what orders are in place. The fact that the home is held by a trust doesn’t override the Court’s power to make orders about occupation or transfer. Get advice specific to your situation before making any assumptions about who has the right to stay.
Can my former partner change the trust deed after we separate to cut me out?
Amendments to a trust deed after separation are possible in theory, but they can be scrutinised by the Court and, in some cases, set aside where they were designed to defeat a property claim. If you believe changes have been or are about to be made, seek advice urgently. Injunctive orders can be sought to prevent certain actions pending settlement.
Does it matter if I’ve never received a distribution from the trust?
It matters, but it doesn’t close the issue. Where you’ve never received distributions but you effectively control the trust as trustee or appointor, the Court will still examine the trust. Where you’re a beneficiary but have no control and have never received anything, the trust is less likely to be treated as your property, though it may still be considered as a financial resource if future distributions are realistic.
Can I set up a new family trust now to protect assets I own?
Transferring assets into a trust after separation is a serious step and one that carries real legal risk. Post-separation transactions can be set aside, and they can reflect poorly on you in proceedings. Don’t do this without getting advice first.
My former partner says the trust belongs to their family, not to us. Is that correct?
It might be, and it might not be. The question is whether the trust genuinely operates as an independent family entity or whether your former partner has, in practice, controlled it and benefited from it throughout the relationship. That’s a factual question that depends on the trust documents and the history. Don’t accept the assertion at face value.
Conclusion
A family trust is not a wall between your assets and a property settlement claim. It can be a relevant structure, depending on how it was set up and how it was used. Courts are experienced at looking through the legal form of a trust to the financial reality underneath.
The outcome for your settlement depends on who controls the trust, how it has functioned during the relationship, and what the evidence shows. Those are answerable questions, and they’re worth answering before you agree to anything.
If there’s a family trust in your separation and you’re not sure where it leaves you, the right time to find out is now, not after you’ve signed a consent order.
This article is general information only and is not legal advice. Family law outcomes depend on your individual circumstances. For advice about your situation, speak with a qualified family lawyer.
About the Author
Christopher (Chris) Jones is the Principal Lawyer and co-founder of CK Family Lawyers, a Queensland family law firm. Chris advises on divorce, property settlement, parenting arrangements, binding financial agreements, mediation and domestic violence matters. After working in legal environments where clients felt depersonalised and lost in jargon, he co-founded the firm with Krystina Jones on the belief that people deserve family lawyers who genuinely care, and he works directly with his clients throughout their matters.
