Introduction
Q1: My ex has a family trust. Does it matter if the trust isn't counted as property?
A: A trust that counts as a financial resource under s 75(2)(b) of the Family Law Act 1975 can shift your settlement percentage significantly, even if the trust itself stays out of the property pool. Reference: Hall v Hall [2016] HCA 23
Q2: Do I need to prove my ex controls the trust for it to affect the settlement?
A: The court asks whether your ex can reasonably expect financial support from the trust, not whether they legally control it. A long history of receiving distributions is enough. Reference: Kelly v Kelly (No. 2) [1981] FamCA 78
Q3: Can the court give me a bigger share because my ex benefits from a trust?
A: Courts regularly increase one spouse's share of the existing property pool to offset the other spouse's access to trust wealth. The adjustment has reached 30% in some cases. Reference: Harris & Dewell and Anor [2018] FamCAFC 94
What makes a trust interest a financial resource rather than property?
If you are a beneficiary of a family trust but cannot hand yourself the money, the court may rule the trust is not part of the property pool. That does not make the trust irrelevant. The court will look at whether you can reasonably expect to benefit from it in the future.
The High Court set out the key definition in Hall v Hall [2016] HCA 23. The reasonable expectation test is much broader than the control test used for property. It lets the court look at trusts run by your parents, siblings, or professional trustees, as long as you have a history of receiving benefits or a clear chance of future distributions.
"The reference to 'financial resources' in the context of s 75(2)(b) has long been correctly interpreted by the Family Court to refer to 'a source of financial support which a party can reasonably expect will be available to him or her to supply a financial need or deficiency'... Whether a potential source of financial support amounts to a financial resource of a party turns in most cases on a factual inquiry as to whether or not support from that source could reasonably be expected to be forthcoming were the party to call on it."
The key difference from the property classification: you do not need to control the trust. In Kelly v Kelly (No. 2) [1981] FamCA 78, the Full Court ruled that neither legal nor factual control is necessary. What matters is the history of benefits received and what is likely to come in the future.
Even if you have no current entitlement to trust capital, you still hold two rights: the right to due consideration and the right to due administration. Kennon v Spry [2008] HCA 56 confirmed these are equitable interests the court must weigh under s 75(2).
During a 35-year marriage, the husband was a beneficiary of an intergenerational family trust set up by his parents. After his parents died, he and his two siblings became joint appointors and directors of the corporate trustee. The wife argued that one-third of the trust's value (approximately $1.56 million) should be included in the property pool.
The husband argued he did not control the trust because all decisions required majority or unanimous agreement from his siblings. He called his interest a nebulous financial resource at best.
Outcome: The court found the trust assets were not property but were a financial resource. The husband could not access the capital unilaterally, but he had a reasonable expectation of ongoing benefits such as director's fees and distributions. The court applied a 52/48 split favouring the wife.
The practical takeaway: if you have relied on trust distributions for income, capital, or housing, the court will almost certainly treat the trust as a financial resource. It does not matter that you cannot legally demand a distribution.
How do courts adjust the settlement ratio when trust assets are a financial resource?
Once a trust interest is classified as a financial resource, it enters the property settlement at Step 3, the assessment of other factors under s 75(2). The court cannot split the trust assets directly. Instead, it gives the other spouse a bigger share of the actual property pool to offset the beneficiary spouse's future access to trust wealth.
How large the adjustment gets depends on how significant the resource is. The court looks at the size of the trust, how often distributions have been made, and how likely they are to continue.
"The benefit to the husband of the [trust] as a financial resource is measured by the freedom given to the husband by the father to deal with trust property as he sees fit... The nature, breadth and extent of the husband's dealings with trust property... impacts upon the importance of the financial resource within s 79(4)(e)."
The husband was a potential beneficiary of a Junior Trust set up by his father. The trust owned the family home. The husband had received distributions and lived in the trust property at a reduced rent.
The husband tried to distance himself from the trust, claiming he had no control and that any benefit depended entirely on his father's decisions.
Outcome: The court determined the trust was a significant financial resource. Because the husband would keep benefiting from the trust while the wife would not, the court applied a 30% adjustment for s 75(2) factors. The final split was 80% to the wife and 20% to the husband.
The 30% shift in Keach shows that a financial resource classification is not a free pass. The court can redistribute the existing pool so aggressively that the result is just as severe as if the trust had been added to the pool directly.
In Harris & Dewell [2018] FamCAFC 94, the husband managed a unit trust owned by his 99-year-old father throughout a 24-year marriage. His financial contributions were initially assessed at 65/35 in his favour. The court still applied a 17.5% adjustment for the wife, moving the final ratio to 52.5/47.5.
| Comparison | Harris & Dewell [2018] | Keach & Keach [2011] | Morton & Morton [2012] |
|---|---|---|---|
| Trust Type | Unit Trust | Discretionary Trust | Discretionary Trust |
| Party's Role | Manager (no unit ownership) | Beneficiary (father controlled) | Joint appointor with brother (50/50) |
| History of Benefit | Used trust assets as loan security, ran trust operations | Lived in trust property, received distributions | Genuine joint arrangement with sibling |
| Ratio Adjustment | 17.5% shift to Wife | 30% shift to Wife | 10% shift to Wife |
| Final Result | 52.5/47.5 to Wife | 80/20 to Wife | 60/40 to Wife |
Decisive factor: The more you have relied on trust wealth and the more exclusive your access to future benefits, the bigger the adjustment. In Keach, the husband lived in trust-owned property and had a history of distributions, justifying a 30% shift. In Morton & Morton [2012] FamCA 30, control was genuinely shared with a brother, limiting the adjustment to 10%.
Does a trust financial resource need precise valuation?
You do not need to put a precise dollar figure on a financial resource the way you would for property in the asset pool. Courts only need enough evidence to understand the trust's scale and distribution pattern. Putting an exact value on a discretionary beneficiary's expectation is inherently difficult, and the law does not require it.
"There is a degree of artificiality about attempting to assign a monetary value to such an intangible species of property [the right to due consideration]... what the parties and the Court ought to be concerned to ascertain was whether the Trust... were significant financial resources... there would be no need to attempt to value them as if they were property, but only to gain an appreciation of the extent to which the [party] might reasonably expect to receive benefits."
The wife came from an extremely wealthy family and was an eligible beneficiary of several family trusts. The husband issued subpoenas for ten years of trust tax returns and financial statements, seeking to value the wife's equitable rights to due consideration and administration.
The wife objected, arguing that she did not control the trusts and had no fixed entitlement, so her rights could not be valued. She said the husband was on a fishing expedition.
Outcome: The court struck out the husband's subpoenas. The judge held that without expert evidence proving such intangible rights can even be valued, the detailed financial documents lacked apparent relevance. The court only needed to understand whether the trusts were a significant financial resource to determine a just and equitable settlement.
Cristopher & Pelleas confirms that you do not need an expensive actuarial valuation to prove a financial resource exists. Evidence of the trust's overall value, past distribution patterns, and the lifestyle funded by trust wealth is typically enough for the court to adjust the ratio.
Summary
-
Reasonable expectation is the test, not control. Hall v Hall [2016] HCA 23 and Kelly v Kelly (No. 2) [1981] FamCA 78 established that a party with no control but a history of trust benefits holds a financial resource that will affect the settlement.
-
The adjustment can be substantial. Keach & Keach shows that a trust financial resource can shift the final ratio by up to 30%, leaving the beneficiary spouse with as little as 20% of the divisible pool.
-
Scale and exclusivity determine the size of the shift. Harris & Dewell [2018] FamCAFC 94 shows a 17.5% adjustment where the husband managed the trust, while Morton & Morton [2012] FamCA 30 shows only 10% where control was genuinely shared with a sibling.
-
Precise valuation is not required. Cristopher & Pelleas confirms that courts need only a general sense of the trust's significance, not a formal actuarial report.
-
Transparency protects you. Shnell & Frey shows that full disclosure of trust arrangements leads to a measured outcome. Attempts to hide trust interests typically result in harsher adjustments.
Do：
- Disclose all trust distributions and benefits early in the process
- Provide evidence of genuine third-party control and independent decision-making
- Document the trust's distribution history to give the court a clear picture
- Consult a family lawyer experienced in trust matters before settlement negotiations
Don't：
- Hide trust income or understate the value of benefits received
- Assume that lacking the title of trustee means the trust is irrelevant
- Seek expensive actuarial valuations when a general overview would suffice
- Attempt to reduce trust distributions or remove yourself as a beneficiary after separation
