Family Trusts and Property Settlements in Queensland

In Queensland, property settlements between separating spouses and de facto partners are dealt with under the Family Law Act 1975 (Cth). Section 79 applies to married couples and section 90SM applies to de facto couples. The Family Law Amendment Act 2024 (Cth) received Royal Assent on 10 December 2024, and its main property changes started on 10 June 2025. Under the amended s 79(3)(a), the Court’s first step is to identify “the existing legal and equitable rights and interests in any property of the parties.” It must also identify the parties’ existing liabilities.

If your business, investment properties or share portfolio are held in a family trust, that first step raises an immediate question: is the trust’s property “property of the parties” at all? The answer usually depends on how much control a party has over the trust, and whether the trust’s assets can be directed to one or both parties.

This article explains how family trusts are dealt with in property settlements in Queensland. It covers what the High Court decided in Kennon v Spry, how the 2025 amendments affect trusts, what disclosure is required, and why early legal advice matters when a trust is involved.

What a family trust is, and what it isn’t

A family trust is usually a discretionary trust. The trustee (often a company) holds assets for a group of beneficiaries. No beneficiary has a fixed entitlement. Instead, the trustee decides each year who receives income or capital.

Three roles matter most:

• The trustee legally owns the trust assets and decides on distributions.
• The appointor can usually remove and replace the trustee. In practice, this is often where the real control sits.
• The beneficiaries can receive distributions but generally cannot demand them.

Gold Coast business owners and property investors often use trusts for good commercial and tax reasons. The trap is assuming that because “the trust owns it, not me,” the assets are automatically outside a property settlement. That assumption is often wrong.

When trust assets form part of the property pool

The key authority is the High Court’s decision in Kennon v Spry [2008] HCA 56. In that case, the husband was the sole trustee of a discretionary family trust and his wife was an eligible beneficiary. The husband had earlier removed himself as a beneficiary. Even so, the High Court held, in the particular circumstances of the case, that the trust assets could be treated as property of the parties to the marriage. This was because the husband, as trustee, had power to distribute the whole trust fund to his wife, and she had a right to have the trust properly administered.

Since Kennon v Spry, courts have looked closely at where control over a trust really sits, and whether the trust’s wealth can be directed to one or both parties. If it can, the trust’s assets may be treated as part of the pool available for division, even though neither party’s name is on the title.

What matters is how control works in practice, not what the documents call it. Courts commonly look at:

• who the director and shareholder of the corporate trustee is
• who holds the power to appoint and remove the trustee
• who can be a beneficiary, and whether the trust deed can be changed to add them
• the history of distributions, including where the money actually went

Property, financial resource, or neither

Trusts generally fall into one of three categories:

• The trust’s assets are included in the pool and divided.
• Financial resource. Neither party controls the trust, but one can reasonably expect to benefit from it (for example, a trust controlled by a parent). The assets aren’t divided, but the Court can take that expected benefit into account when it considers the parties’ current and future circumstances.
• The connection is too remote to be relevant.

Sometimes one party is said to control a trust indirectly, through a trustee or appointor who simply follows their instructions (sometimes called a “puppet”). This can be argued, but it is usually harder to establish. In these cases the quality of the evidence becomes especially important.

What the 2025 amendments changed for trusts

The 2025 reforms set out the steps of a property settlement in the legislation itself. They have also changed how the Court deals with money that no longer exists. The Federal Circuit and Family Court of Australia has published an overview of the property changes from 10 June 2025.

No more “add-backs”

Before June 2025, courts sometimes “added back” money that had been spent, treating it as if it were still in the pool. In Shinohara & Shinohara [2025] FedCFamC1A 126, decided on 23 July 2025, the Full Court of the Federal Circuit and Family Court of Australia held that under the amended s 79(3), property that no longer exists cannot be notionally added back to the balance sheet.

That doesn’t mean spending is ignored. Money that has been spent or disposed of can still be considered, either as part of the parties’ contributions under s 79(4) or as part of their current and future circumstances under s 79(5).

This matters for trusts. If trust money has been distributed or withdrawn and spent before trial, it won’t appear on the balance sheet as notional property. It has to be dealt with through evidence about contributions and the parties’ circumstances, which makes careful financial analysis even more important.

Transactions designed to defeat a claim

The Court also has direct power over trust dealings. Under Family Law Act 1975 (Cth) s 106B, in proceedings under the Act, the Court can set aside or restrain a transaction by or for a party that is made to defeat an existing or anticipated order. It can also do this where the transaction, whatever the intention, is likely to defeat such an order. The definition of “disposition” in s 106B expressly includes “the issue, grant, creation, transfer or cancellation of, or a variation of the rights attaching to, an interest in a company or a trust.”

This means that changing the appointor, removing a spouse as a beneficiary or moving assets out of the trust after separation can be challenged. Steps like these can also damage the credibility of the party who took them.

Disclosure: what each party must provide

Since 10 June 2025, the duty of full and frank disclosure in financial and property matters has been set out in the Family Law Act 1975 (Cth) itself: in s 71B for married couples and s 90RI for de facto couples. The duty applies while separated parties are preparing for proceedings. Once proceedings start, it continues until they are finalised. The Federal Circuit and Family Court of Australia publishes guidance on the duty of disclosure.

In trust matters, relevant disclosure commonly includes:

• the trust deed and every deed of variation
• financial statements and tax returns for the trust and the corporate trustee
• distribution resolutions (the trustee’s records of who received what, and when)
• beneficiary loan accounts and unpaid present entitlements (amounts a beneficiary has been allocated but not actually paid)
• the corporate trustee’s company records, including directors and shareholders

Beneficiary loan accounts can be significant and are often misunderstood. They can affect both the value of the trust and each party’s liabilities. Our article on how loans from family members are treated in a financial settlement explains why the Court looks closely at whether a debt is genuine.

If you are the partner who doesn’t control the trust, you are entitled to this information. Don’t accept a summary figure without seeing the documents behind it.

Valuation, tax and third parties

Once trust assets have been identified, they must be valued. That is rarely simple when the trust runs an operating business. Goodwill, plant and equipment, work in progress, related-party loans and future maintainable earnings all affect the figure, and a forensic accountant is often needed.

Other complicating factors include:

• Tax and duty consequences. Moving assets out of a trust, or restructuring it, can trigger capital gains tax, stamp duty and other costs. Get advice from an accountant or tax adviser before any agreement is finalised.
• Third parties. Parents, siblings or business partners may be co-directors, co-beneficiaries or creditors of the trust. Their interests can affect which orders are practical.
• Earning capacity. If the trust’s business is one party’s main source of income, who keeps it affects both parties’ future circumstances.
• Self-managed superannuation funds. These are often part of the same wealth structure but follow separate splitting rules. See our guide on whether superannuation forms part of a property settlement.

A hypothetical example

The following scenario is hypothetical and for illustration only.

A married Gold Coast couple separates after many years together. One partner is the sole director and shareholder of the company that acts as trustee of the family trust, and is also the appointor. Both partners are named beneficiaries. The trust runs a trades business and owns two investment units.

On these facts, the principles from Kennon v Spry are likely to be central, and the trust’s assets may well be treated as property of the parties. The practical disputes are likely to be about value: what the business is worth, whether the beneficiary loan accounts are genuine debts, and how distributions made in the year before separation should be considered now that add-backs are no longer available.

Change one fact, so that a parent is the appointor and sole director, and the analysis could change entirely. It then becomes a question of evidence about who really makes the decisions.

Common mistakes to avoid

• Assuming the trust is untouchable. Whether trust assets are in the pool depends on control, not labels.
• Restructuring after separation. Changing trustees or appointors, or making unusual distributions, can be challenged and can harm your case.
• Informal agreements. A handshake deal about the trust won’t finalise your property settlement and can cause problems later. Formalise any agreement properly.
• Time limits apply under Family Law Act 1975 (Cth) s 44. Married couples generally have 12 months from the date a divorce order takes effect, and de facto couples generally have two years from the end of the relationship. After that, the Court’s permission (leave) is generally needed. Read more about property settlement time limits.
• Under-resourcing the non-controlling partner. If one party controls the trust’s money, the other may struggle to pay legal costs. The Court can make interim orders to address this. See our article on interim orders to fund legal expenses (Hogan orders).

Resolving trust disputes without going to court

Court is the last resort, not the default. Many property matters involving trusts are resolved through negotiation or family law mediation, usually once disclosure is complete and valuations have been obtained.

Any agreement can then be formalised through consent orders or, in some circumstances, a Binding Financial Agreement. Both options can deal with the trust directly. For example, one party might resign as director and appointor while the other receives a balancing payment.

Early advice helps you get the order of steps right: what to request, which experts to engage, and how to protect assets while negotiations continue. For a wider view of the new framework, read our overview of the 2025 property settlement reforms in Queensland.

Frequently asked questions

Can my former partner’s family trust be divided if I’m not a trustee?

• Possibly. If your former partner effectively controls the trust and its assets can be directed to either of you, those assets may be treated as property of the parties and included in the pool. Your own role in the trust isn’t the deciding factor.

What if the trust is controlled by my partner’s parents?

• The assets are less likely to be divided. However, if your partner can reasonably expect to benefit, the trust may be treated as a financial resource and taken into account.

Can trust money that has already been spent be “added back”?

• Not under the amended law, as interpreted in Shinohara & Shinohara. Spent money no longer goes on the balance sheet, but how it was used can still be considered when the Court assesses contributions and each party’s circumstances.

Do I have to provide trust documents to my former partner?

• Yes, if they are relevant. The duty of full and frank disclosure is now set out in the Family Law Act 1975 (Cth) itself. It covers relevant information you know about and documents that are or have been in your possession or control, including documents about trusts and companies.

Talk to us before you act

Trusts can be one of the more complex and financially significant parts of a property settlement. How the matter is dealt with often depends on the trust deed, the history of distributions and the quality of the financial evidence. Getting advice early can help you understand your options, whether you control the trust or are trying to find out what it holds.

Our family law property settlement team advises in English and Mandarin. New family law clients can book a free 60-minute family law consultation or call (07) 5621 3799 (Monday to Friday, 8:30am to 5:00pm). You can also learn more about our Gold Coast property settlement lawyers.