A family trust is not automatically safe in a divorce, but it is not automatically split either. The court looks at who really controls the trust and who can benefit, so if you or your former partner control it, the trust assets may be treated as property and shared.
The quick answer
- A trust is not a shield. The court can look past the trust deed to see who is really in charge.
- Control is the key question. If a spouse can control the trust and benefit from it, the assets may go into the property pool.
- It can still count if it is not property. The trust may be treated as a "financial resource" that changes the final split.
- Your parents' trust is usually different. Being a beneficiary with no control does not normally make it your property.
- Moving assets can be undone. The court can set aside a deal made to defeat a property claim.
Which law applies in Queensland?
Property settlements in Queensland are decided under a federal law, the Family Law Act 1975 (Cth). There is no separate Queensland Act for dividing property after a separation.
For married couples, the main rule is section 79. For de facto couples, it is section 90SM, which works in a very similar way.
The court can make any order it thinks is "just and equitable". To do that, it first has to work out what property each of you has.
Section 4 of the Act gives "property" a very wide meaning. That is why a trust can be caught, even when neither of you owns the assets in your own name.
Who controls the trust?
Most family trusts are discretionary trusts. The trustee holds the assets and decides who gets income or capital, and when.
On paper, the trustee owns the assets, not the beneficiaries. But the court looks at how things really work, not just the paperwork.
The court will ask questions like these:
- Are you the trustee, or a director of the company that is the trustee?
- Are you the appointor, the person who can hire and fire the trustee?
- Do you hold shares or voting rights in the trustee company?
- Can you pay money from the trust to yourself?
- Has the trust paid for your home, cars or living costs?
If the answers show one spouse is in charge, the trust assets may be treated as that person's property. This is called direct control.
Indirect control is harder to prove. It means a spouse is really pulling the strings of someone else, such as a parent, who holds the power on paper.
Property or financial resource?
The court can count a trust in one of two ways. The label matters, because it changes how much the trust affects your settlement.
| If the trust is... | What it means for you |
|---|---|
| Property | Its value goes into the pool to be divided. The court can order a payment that, in practice, may be funded from the trust. |
| A financial resource | It stays out of the pool. The court weighs it when looking at each person's future needs and circumstances. |
A financial resource can still change the result. For example, the other spouse may receive a bigger share of the shared pool to balance things out.
What if it is your parents' trust?
Many people are beneficiaries of a trust set up by their parents or grandparents. Being a beneficiary usually means the trustee may choose to pay you, not that you own anything.
If you have no control over the trustee or the appointor, the trust is unlikely to be counted as your property. It may still be looked at as a financial resource, especially if you get regular payments.
Things can change when control passes to you. This often happens when a parent dies and you take over as appointor or inherit shares in the trustee company.
Recent decisions show that holding the power can be enough, even if you have never used it. Get advice before you accept any new role in a family trust during a separation.
What if assets are moved out of the trust?
Some people try to change a trust deed or move assets out once a relationship ends. Under section 106B, the court can set aside a transaction made to defeat a property claim.
In some cases, the court can also make orders that bind a third party, such as the trustee. [CHECK: confirm current Part VIIIAA sections, s 90AE and s 90AF]
If you think assets are being moved, act quickly. A lawyer can ask the court for orders to stop it while your case is decided.
What changed in June 2025?
On 10 June 2025, changes from the Family Law Amendment Act 2024 (Cth) took effect. They wrote the court's step by step method for property cases into section 79 itself.
The future needs factors that used to sit in section 75(2) now also sit inside section 79. These include each person's financial resources, which is where a trust that is not property is usually weighed. [CHECK: confirm subsection number in the current s 79]
The changes apply to new cases and to existing cases where the final hearing had not started. So if your case is just beginning, the new rules apply to you.
Case studies
These real decisions show how courts deal with family trusts. Each case turned on its own facts, so your result may be different.
Kennon v Spry
[2008] HCA 56; (2008) 238 CLR 366. High Court of Australia, 3 December 2008. Read the judgment
The facts: Dr Spry set up a family trust before he married and was its trustee. During the marriage, and again after the separation, he made changes that stopped himself and his wife from benefiting and moved assets to trusts for their daughters. [CHECK: dates and exact steps against the judgment]
The decision: The High Court held that the trust assets could be counted in the property settlement, even though the trust began before the marriage. The changes were set aside and the wife received an order worth more than $2 million. [CHECK: amount and which dealings were set aside under s 106B]
What it means for you: a trust started before your relationship can still be counted. Changing the deed to cut out a spouse may not work.
Harris & Dewell and Anor
[2018] FamCAFC 94. Full Court of the Family Court of Australia, 25 May 2018. [CHECK: add judgment link]
The facts: The wife argued that units in a unit trust should be in the property pool. The units were held by the husband's 99 year old father.
The decision: The Full Court dismissed the wife's appeal, so the units were not treated as the husband's property. [CHECK: confirm reasoning on the husband's role in the trustee company against the judgment]
What it means for you: assets held by a parent are not automatically your property, even if you help run things.
Harris & Harris
[2011] FamCAFC [CHECK: number, likely 245]. Full Court of the Family Court of Australia, [CHECK: date]. [CHECK: add judgment link]
The facts: The husband's father set up the trust, and after his death the husband's mother became the appointor. The trial judge counted the trust assets as property of the marriage.
The decision: On appeal, the wife argued the mother was just a "puppet" for the husband. The Full Court overturned the trial decision because there was not enough evidence of indirect control.
What it means for you: if you say your former partner secretly controls a trust, you need real evidence, not just suspicion.
Caldwell & Caldwell
[2026] FedCFamC1A 81. Federal Circuit and Family Court of Australia (Division 1), Appeal, [CHECK: date]. [CHECK: add judgment link]
The facts: Three family trusts held a business built across four generations. After the husband's father died in 2022, the husband became a joint appointor with the couple's two adult sons and held key shares in the trustee companies.
The decision: In 2025, the trial judge found the trusts were not the husband's property. On appeal, a majority found he had real control because he could remove the sons as appointors, control the trustee companies and pay benefits to himself.
The majority held the trusts were his property and sent the case back to a trial judge to decide the split. One judge disagreed, so this area of law is still developing.
What it means for you: having the power to control a trust can be enough, even if you never use it. The history of the family wealth may still matter when the court decides the split.
What to gather now
Trust cases are won and lost on documents. Start collecting these early, and keep copies somewhere safe.
- The trust deed and every deed of variation
- Names of the trustee, the appointor and the beneficiaries
- The trustee company's share register and constitution
- Trust financial statements and tax returns for at least 3 years
- Records of distributions and loans to either of you
- Any changes made to the trust around the time you separated
Key terms
| Term | What it means |
|---|---|
| Discretionary trust | A trust where the trustee chooses who gets income or capital, and how much. Most family trusts work this way. |
| Trustee | The person or company that holds the trust assets and makes decisions about them. |
| Appointor | The person who can hire and fire the trustee. This role often holds the real power. |
| Beneficiary | A person who may receive money from the trust if the trustee chooses. |
| Corporate trustee | A company that acts as trustee. Whoever controls the company often controls the trust. |
| Property pool | All the assets and debts the court divides between separating couples. |
| Financial resource | A source of future money or support that is not in the pool but can change the split. |
Frequently asked questions
Is a family trust protected in a divorce?
Not automatically. If you or your former partner control the trust and can benefit from it, the court may treat the trust assets as property and include them in the settlement.
Can my ex claim my family trust?
Your ex cannot claim the trust itself, but the court can count its value. If you control the trust, the court may order you to pay your ex a share, which may in practice come from trust assets.
Is my parents' family trust part of my divorce?
Usually not, if you are only a beneficiary with no control. It may still be treated as a financial resource, and this can change if you become the appointor or take control of the trustee company.
Can I remove my spouse as a beneficiary of our family trust?
Removing a spouse does not stop the court from counting the trust. In Kennon v Spry, changes made to exclude the wife were set aside and the trust assets were still counted.
Do the same rules apply to de facto couples in Queensland?
Yes, in most cases. De facto property claims are decided under section 90SM of the Family Law Act 1975, which follows the same approach to trusts as section 79 does for married couples.
Can a binding financial agreement protect a family trust?
A binding financial agreement can set out how a trust will be treated if you separate. It must be drafted and signed correctly, and each of you must get independent legal advice first.
