Does a Family Trust Really Protect the Farm? 

Short answer – not always. A family trust can hold the farm for generations, but a 2026 court decision, Caldwell & Caldwell [2026] FedCFamC1A 81 shows a trust does not automatically put the farm out of reach. One of the most important factors is who effectively controls the trust, rather than simply who established it or where the wealth originally came from. If one person can take control of a trust and benefit from it, a court may treat the farm as that person’s property.  

You set up the trust to protect the farm. To keep it in the family. To make sure that whatever happens, the land stays where it belongs. 

A recent Federal court decision says the trust might not do what you think it does. In 2026, the Full Court in Caldwell & Caldwell looked at three family trusts holding a business built over four generations. More than one hundred years of work. The court found those trusts were the husband’s property, and could be counted in his divorce settlement. It did not matter that his father set them up. It did not matter that four generations built the wealth. It did not even matter that he had never taken a cent out of them. 

For farming families across NSW, that is a wake up call worth paying attention to. 

What the Caldwell Decision Actually Said 

The husband worked in the family business his whole life. He was paid well but never received a distribution from the trusts. When the couple separated in 2022, the trusts sat around him but not obviously in his hands. Later that year his father died. The husband inherited shares in the trustee companies and became a joint appointor of all three trusts, alongside his two adult sons. 

On paper that looked like shared control. But the deeds told a different story. The husband held the main voting shares in the trustee companies. He could remove his sons as appointors at any time, without their agreement. And he could direct the trusts to pay money to himself. 

He had never used those powers. He had even made an agreement with his sons after separation not to remove them. The first judge said the trusts were not his property. On appeal, the majority disagreed. Because he could take full control and benefit himself, the court held the trusts were his property for the purposes of the divorce. One judge disagreed, arguing that the power to do something is not the same as doing it. The case has now gone back for the actual split to be worked out, and a further appeal is possible. 

The decision in Caldwell is an important Full Court authority, but family trust cases are highly dependent on the wording of the trust deed, the powers held by those involved and the particular facts of each case. The law in this area continues to evolve. 

Why “Who Built It” Did Not Protect the Trust 

This is the part that should stop every farming family in NSW. The husband’s argument was one you hear at kitchen tables all the time. My father set this up. My grandfather started the business. The next generation built it with me. It is not mine to give away. 

The court’s answer was blunt. None of that decided the question. Not the intentions of the person who set up the trust. Not the wishes of the father who had died. Not the private agreement with the sons. Not the fact that four generations had a hand in it. What decided it was control. If the trust deed gives you effective control and the ability to benefit from the trust, a court may treat the trust assets as your property in the right circumstances. 

In Caldwell, control outweighed the history of how the trust had been created. That is the lesson. 

What This Means for Your Family Farm 

Most farm trusts in this state were set up years ago, often decades ago. They were built for tax reasons, or on advice that made sense at the time. Then life moved on. Parents passed away. Children came home to farm, or moved to the city. The deed sat in a drawer and nobody looked at it again. 

Caldwell says that deed matters more than you think. The exact wording of who can appoint and remove trustees, who controls the trustee company, and who can receive distributions can decide whether the farm is safe or exposed. 

Two farms can look identical from the road and be worlds apart on paper. One is structured so that no single person can seize control. The other hands one person the keys to everything. One structure may offer significantly greater protection than the other. 

The Risk Is Not Only Your Marriage 

Here is what many families miss. The exposure is not just about you and your spouse. It is about your children. 

Picture the farm held in a trust that your son or daughter will one day control. They marry. Years later that marriage ends. If he holds the kind of control the husband held in Caldwell, the farm your family built could be pulled into his property settlement. The land your grandparents cleared could end up on the table in a divorce that has nothing to do with you. 

This is the fair versus equal problem in a new form. You can plan carefully for how the farm passes to the next generation and still leave it exposed if the structure hands one child too much unchecked control. 

Two Situations We See 

A Central West family ran their operation through a trust and a company set up in the 1990s. On paper, one son was set to inherit full control of the trustee company and the power to appoint and remove trustees. The parents had always assumed the trust kept the farm safe no matter what. A review showed the opposite. If that son ever went through a marriage breakdown, the whole farm could be counted as his.  

Another family had put off looking at their structure for years because it felt too big and too settled to touch. When the patriarch passed away, control of three entities landed with one family member almost by accident, much as it did in Caldwell.  

What Good Structure Looks Like Now 

You cannot make a farm completely divorce proof. No lawyer honestly can. But Caldwell makes the goal clear. One lesson from Caldwell is that trust structures where control is shared, rather than concentrated in one individual, may reduce the risk of the trust being treated as that person’s property. However, every structure should be assessed on its own terms. 

In practice that can mean more than one appointor who must act together, an independent person in the control chain, clear limits in the deed on paying yourself, and a plan for who takes over control that is deliberate rather than accidental. It also means looking at the trustee company shares, not just the trust deed, because that is where real control often sits. 

The point is not to pick one fix. The point is to look. Most families have never had their structure read against a case like this. 

This Is Not Just a Legal Issue. It Is a Legacy Issue 

The land is more than an asset. It is the thing your family has poured itself into for generations. Getting the structure wrong does not just risk money. It risks the farm leaving the family, and it risks the relationships around the kitchen table. 

Caldwell is a hard reminder that good intentions and family history do not protect the farm on their own. A carefully considered structure can significantly improve protection, but no structure guarantees a particular outcome. If you have never had yours reviewed, now is the time.