Cold Reality for Trust Assets in Family Law Proceedings – Special Leave Denied for Caldwell and Caldwell

The decision in Caldwell and Caldwell [2025] FedCFamC1F 506 (Caldwell (No 1)) affirmed the position that while the Court has broad powers in respect to family law disputes, its powers are not limitless. In the context of preserving intergenerational wealth, particularly where long-standing family-operated businesses are involved, Caldwell (No 1) provided a welcomed reassurance that where trusts are established and structured effectively, for a clear and genuine purpose, they can successfully limit assets from the reach of family law proceedings.  

However, on 11 May 2026, the Full Federal Circuit and Family Court (FFCFC) delivered its judgment for Caldwell and Caldwell [2026] FedCFamC1A 81 (Caldwell (No 2)) and effectively overturned Caldwell (No 1).

On 10 September 2026, the High Court of Australia refused the applicant’s special leave to appeal Caldwell (No 2). This has effectively confirmed the position established in Caldwell (No 1).

Caldwell (No 2) – Key Takeaways

The FFCFC declared that the assets of three discretionary trusts were ‘property’ of the husband for the purposes of section 79 of the Family Law Act 1975 (Cth) (Act).

The decision in Caldwell 2 affirmed that effective control and the ability to benefit from assets of discretionary trusts remain central to whether trust assets are categorised as property. While the origin of wealth and the intention and purpose of trusts are relevant in assessing contributions made by the parties, those considerations do not necessarily prevent the trust assets from first being categorised as property for the purposes of the Act where sufficient control exists.

For more information regarding structuring and asset protection, please contact:

Alasdair Woodford
Principal
T: 03 5225 5217 | M: 0436 456 144
E: awoodford@ha.legal

Joseph Flanagan
Senior Associate
T: 03 5226 8504 | M: 0491 307 550
E: jflanagan@ha.legal

Tayla Berger
Senior Associate
T: 03 5226 8559 | M: 0407 825 365
E: tberger@ha.legal

Jemimah Fitzgerald
Lawyer
T: 03 5225 5219
E: jfitzgerald@ha.legal

Prepared with the assistance of Pippa Duniam.