Australian family courts can access trust assets during relationship breakdowns

Recent federal tax overhauls in Australia, including a new 30 per cent minimum tax floor at the trustee level and changes to capital gains tax, have complicated the division of assets held in discretionary trusts during relationship dissolutions.

While discretionary trusts are often used to protect family wealth, legal experts note that they are not impenetrable. Geoff Mazengarb, Special Counsel at DDCS Lawyers, explains that family courts maintain the authority to ensure equitable asset division. The courts can examine or dismantle legal structures if a trust is deemed to be the ‘alter ego’ of one party who maintains sole control, potentially allowing those assets to be included in matrimonial settlements.