When Are Trusts “Property” in Family Law? Key Lessons from Rigby & Kingston (No 4) [2021] FamCA 501

In Australian family law, one of the most complex issues in a property settlement is whether trust interests or inherited wealth form part of the divisible asset pool.

A common question we hear from clients is:

“Can my former partner claim against my family trust?”

The decision in Rigby & Kingston (No 4) [2021] FamCA 501 provides critical guidance—particularly for families with intergenerational wealth, discretionary trusts, and estate structures.

Understanding the Dispute

This case involved a high‑value property dispute where:

• The husband had minimal assets, and

• The wife had access to significant family wealth held across trusts and companies.

The wife’s financial position included:

• Minority shareholdings in family entities

• Beneficiary interests in discretionary trusts

• Rights connected to a broader family arrangement

• An interest in a testamentary discretionary trust created by her father

Importantly:

• The wealth was largely created by the wife’s father, and

• The wife did not control many of the underlying entities.

The Legal Issue: Is a Trust Interest “Property”?

The central question before the Court was:

Are interests in family trusts and inherited structures “property” under the Family Law Act 1975 (Cth)?

This distinction is critical:

• If it is property → it can be divided between the parties

• If it is a financial resource → it may influence the outcome, but is not directly split

Key Legal Principles from the Case

1. Control Over the Trust Is Critical

The Court reaffirmed that control is often decisive.

Where a party:

• Controls the trustee; or

• Can influence distributions

…the Court is more likely to treat trust assets as property.

2. Beneficiaries Do Not Own Trust Assets

A beneficiary of a discretionary trust:

• Does not own the trust property, and

• Only has a right to be considered for distributions.

3. Expectation vs Legal Entitlement

The Court distinguished between:

• A mere expectation of receiving assets; and

• A legal or equitable interest capable of valuation

Future or uncertain entitlements are often too speculative to be treated as property.

4. The Trust Deed Matters

Each case turns on the specific terms of the trust, including:

• Vesting dates

• Distribution powers

• Trustee decision‑making

The Outcome in Rigby & Kingston

The Court ultimately found that:

The wife’s interests in the broader family trust structures were not property available for division; and were instead treated as a financial resource.

Why This Matters for Property Settlements

Not All Wealth Is Divisible

Access to wealth does not automatically mean it will be included in the property pool.

Trust Structures Can Provide Protection

Well‑structured and properly administered trusts can reduce exposure in family law disputes.

Control Is the Deciding Factor

The more control a person has, the more likely trust assets will be treated as property.

Practical Tips for Clients

If you are dealing with a separation involving trusts, you should:

Obtain Advice Early

Understanding whether your interest is:

• Property; or

• A financial resource

…can materially affect your entitlements.

Review the Trust Structure

Key questions include:

• Who controls the trust?

• Who are the appointors and trustees?

• What rights do beneficiaries actually have?

Protect Intergenerational Wealth

For families:

• Proper structuring and governance is critical

• Testamentary trusts can be a useful asset protection tool

Frequently Asked Questions

Are trust assets included in a divorce property settlement in Australia?

Not always. Trust assets are only included in the property pool if a party has sufficient control or a proprietary interest in the trust. Otherwise, the interest may be treated as a financial resource rather than divisible property.

What is the difference between property and a financial resource in family law?

Property can be directly divided between parties in a settlement, while a financial resource is something a party may benefit from in the future but cannot control or access directly. Financial resources may influence the outcome but are not split.

Can a discretionary trust be treated as property in family law proceedings?

It depends on the level of control. If a party controls the trustee or has the power to influence distributions, the Court may treat the trust assets as property. If not, the interest is usually considered a financial resource.

Does inheritance form part of the asset pool in a separation?

Inheritance can form part of the asset pool if it has been received and is legally owned by a party. However, future or contingent inheritances are typically treated as financial resources rather than property.

Why is control important when assessing trust assets in divorce?

Control is critical because it determines whether a party can access or direct trust assets. The more control a person has, the more likely the Court is to treat those assets as property available for division.

Can trusts be used to protect assets from family law claims?

Properly structured and administered trusts can provide some level of asset protection, particularly where the party does not control the trust. However, each case depends on its specific facts and the trust structure.

How Sarinas Legal Can Help

At Sarinas Legal, we advise clients across Queensland on:

• Complex family law property settlements

• Trust structures and asset protection

• Disputes involving inheritances and intergenerational wealth

We provide clear, strategic and practical advice so you understand your position—and your options.

Need Advice About Trusts in Family Law?

If you are separating and there are trusts involved, early legal advice is essential.

Contact Sarinas Legal for tailored guidance on how your assets may be treated.