Property Settlement and Business Interests : Koffels Solicitors and Barristers

Complex property matters for business owners, executives, and individuals with significant wealth

For most people, the financial consequences of separation revolve around a family home, some superannuation, and perhaps an investment portfolio. The legal framework handles those situations reasonably efficiently.

For business owners, executives, and individuals with significant or structured wealth, the picture is categorically different. When the asset pool includes a private company, a discretionary trust, a professional practice, or assets spanning multiple structures and jurisdictions, property settlement becomes one of the most consequential and technically demanding legal processes you will encounter.

This hub page sets out how Australian courts approach property settlement in complex financial circumstances — what gets included in the asset pool, how contested assets are valued, what happens when business interests and trust structures are involved, and what the process looks like when the stakes are high.

Part of the Koffels complex family law guide. For Binding Financial Agreements — the planning tool available before a dispute arises — see our BFA hub page.

What goes into the asset pool

The starting point in any property settlement is identifying everything that is available for division. In straightforward matters, this is relatively uncomplicated. In complex matters, it is frequently the most contested phase of the entire process.

The asset pool in Australian family law is broader than many clients expect. It includes not only assets owned jointly or solely in the parties’ names, but also interests in companies and trusts, superannuation entitlements, assets held overseas, and, in some circumstances, assets held by entities that a party controls or significantly influences, even if they do not legally own them.

What is included — and how it is characterised — can determine the entire shape of a settlement. An interest in a discretionary trust treated as a financial resource rather than property will influence the size of the other party’s entitlement but will not itself be divided. The same interest characterised as property will be brought directly into the pool and divided. The difference in outcome can be substantial.

Both parties are subject to a duty of full and frank financial disclosure under the Family Law Act 1975 (Cth) and the Federal Circuit and Family Court of Australia (Family Law) Rules 2021. The obligation is ongoing and comprehensive — it extends to all assets, liabilities, income, and financial resources, including interests in entities and overseas holdings. Courts treat non-disclosure seriously. Where concealment is established, courts can draw adverse inferences, set aside settlements, and, in appropriate cases, refer conduct for contempt proceedings.

Further reading: Financial disclosure in high-value property settlements: how hidden assets are uncovered →

The four-step framework

Courts approach property settlement through a well-established analytical framework. Understanding it helps clients grasp both the process and the full range of possible outcomes.

Step 1 — Identify and value the asset pool. All property and financial resources are identified and valued as at the date of hearing, or in some cases as at a different agreed date. Contested valuations are a major battleground in complex matters. Each side may engage its own expert, and the court must ultimately resolve competing expert evidence.

Step 2 — Assess contributions. Courts consider what each party contributed to the acquisition, conservation, and improvement of the assets — both financial contributions (income, inheritance, pre-relationship property brought in) and non-financial contributions (homemaking, parenting, supporting a partner’s career or business). In long marriages involving substantial wealth built jointly, a contributions analysis may produce roughly equal outcomes. In shorter relationships or where one party brought in most of the wealth, the contributions analysis can produce very different results.

Step 3 — Consider future needs. Courts adjust for the relative circumstances each party faces going forward — their respective earning capacities, the care arrangements for children, age, health, and any other relevant factor. Where there is significant income disparity or where one party has made substantial career sacrifices, this step can produce material adjustments.

Step 4 — Assess whether the outcome is just and equitable. The court applies a final check. An outcome that the arithmetic of the previous steps produces but that would be plainly unjust in all the circumstances will not stand.

Valuation of privately held businesses

Unlike publicly traded companies, the value of a private business cannot be read from a market price. It must be determined by a forensic accountant applying one or more recognised valuation methodologies.

The three principal approaches are the capitalisation of maintainable earnings method, which values the business at a multiple of its sustainable future earnings; the discounted cash flow method, which models projected future cash flows and discounts them to present value; and the asset-based approach, which values the business’s net assets directly. Each methodology has appropriate applications depending on the nature and stage of the business. A capital-intensive business with predictable cash flows will be valued differently from a professional services practice that depends heavily on its principal’s personal relationships.

The assumptions underlying any valuation — the choice of earnings multiple, the discount rate, the treatment of owner-manager remuneration, the normalisation of one-off items — can produce dramatically different results. In contested matters, it is common for the parties’ respective experts to produce valuations that differ substantially, sometimes by multiples. The court must then assess the competing evidence and arrive at a figure it regards as appropriate, which may or may not align with either expert’s number.

The practical implication is that in any matter involving a business, the engagement of an experienced forensic accountant at an early stage — and the careful briefing of that expert — is as important as the legal strategy itself.

Coming in the weeks ahead: How business interests are valued in property settlements — forensic accounting in practice →

Goodwill — personal versus enterprise

The treatment of goodwill is one of the most contested issues in business valuations for family law purposes, and one where the distinction matters enormously to the outcome.

Personal goodwill is the value attributable to the skills, reputation, relationships, and individual qualities of the business owner. It is inseparable from the person and cannot be transferred to a purchaser upon the sale of the business. Personal goodwill is generally excluded from the family law asset pool — it is not property that can be divided because it cannot be realised independently of the individual.

Enterprise goodwill — sometimes called commercial or institutional goodwill — is value that inheres in the business itself: its systems, its client base, its brand, its established processes. It would survive a change of ownership and be captured in a market sale. Enterprise goodwill is included in the asset pool.

The boundary between the two is frequently contested in professional practices — medical, dental, legal, accounting, and financial advisory — where the business’s value is substantially built on the reputation and relationships of its principals. The specific facts of the business, the nature of the client relationships, the degree to which they are transferable, and whether systems and processes exist independently of the individual all bear on where the line falls.

Coming in the weeks ahead: The treatment of goodwill in business valuations — personal versus enterprise →

Shareholder agreements and family law

Where a business owner’s interest is subject to a shareholder agreement, the interaction between that agreement and family law proceedings requires careful analysis before any settlement is structured.

Shareholder agreements commonly contain provisions that are directly relevant in a family law context: pre-emption rights that require shares to be offered to existing shareholders before any transfer; drag-along and tag-along provisions that affect how a sale can be structured; buy-sell mechanisms triggered by defined events; and restrictions on transfer that may require board or shareholder approval.

Courts have broad powers under the Family Law Act to make orders affecting third parties, including companies and co-shareholders. Section 90AE allows courts to make orders binding on third parties in certain circumstances. But those powers operate in a legal environment that also includes the contractual rights of co-shareholders and the obligations created by the shareholder agreement. An order that directs a party to transfer shares to their former spouse may be technically possible under the Family Law Act but commercially damaging if it triggers pre-emption rights or breaches other provisions of the agreement.

Structuring a settlement that achieves the intended financial outcome while not triggering adverse consequences under the shareholder agreement — or negotiating amendments to the agreement in connection with the settlement — requires the family lawyer to work closely with the corporate lawyer who understands the company’s arrangements. This is an area where Koffels’ full-service capability is directly relevant.

Coming in the weeks ahead: Shareholder agreements and family law — what business owners need to know →

Post-separation changes in business value

Businesses do not stand still during the period between separation and settlement. In some cases they grow substantially — through the efforts of the remaining business owner, through market appreciation, or through transactions that occur after separation. In others they decline.

Where value increases between separation and settlement entirely through the post-separation efforts of one party, courts generally do not treat that increase as part of the pool available for division — it reflects work done by one person after the relationship ended. Where the increase reflects the natural appreciation of an asset acquired during the relationship, the position is less clear. The specific facts, the nature of the business, and the degree to which the increase is attributable to post-separation effort versus underlying asset value determine the outcome.

This issue is one reason why delay in property settlement can work against either party depending on their position — and why obtaining advice quickly after separation is important.

Discretionary trusts in property settlement

The treatment of discretionary trusts is one of the most technically complex and actively litigated areas of Australian family law. The law has shifted significantly over the past two decades and continues to develop.

The foundational principle established by the High Court in Kennon v Spry [2008] HCA 56 is that courts look beyond the formal legal structure to assess the substance of a party’s relationship with a trust. Where a party effectively controls a trust — as trustee, appointor, or through informal influence over its operations — the court may treat the trust’s assets as property available for settlement rather than merely as a financial resource.

Woodcock & Woodcock [2021] extended this analysis in a significant direction. The court found that even where a party lacked formal control over a discretionary trust — no trustee role, no appointor power — evidence that the party had influenced the trust’s operations and derived significant income from it was sufficient to characterise the party’s interest as property rather than a mere financial resource. The practical effect was to bring assets held in a structure specifically designed to be beyond the beneficiary’s formal control into the pool available for division.

The implications for individuals who hold interests in family discretionary trusts — or whose family members control trusts from which they benefit — are significant. The specific trust deed, the history of distributions, the nature and extent of the party’s influence, and the interests of other beneficiaries all bear on how the trust will be treated. There is no single answer that applies across all trusts.

Further reading: Discretionary trusts and preserving assets after Woodcock v Woodcock →

Superannuation and SMSFs

Superannuation is treated as property for family law purposes. Both accumulation and defined benefit interests can be the subject of splitting orders, either by agreement or by court order. The mechanism for splitting is set out in Part VIIIB of the Family Law Act and requires specific procedural steps including notice to the trustee of the relevant fund.

Self-managed superannuation funds introduce additional complexity. The SMSF’s trust deed governs how the fund operates, and splitting orders must be implemented in a manner consistent with the deed and with the Superannuation Industry (Supervision) Act 1993. Where the SMSF holds illiquid assets — real property, business interests, unlisted investments — the mechanics of splitting can become complicated, and early engagement of the SMSF’s accountant and auditor is advisable.

Modern and non-traditional assets

The asset pool in complex property matters increasingly includes asset classes that standard family law practice is not always equipped to address. Cryptocurrency holdings, unvested equity and share options, carried interest in private equity and venture capital funds, intellectual property rights, and digital assets all present valuation and disclosure challenges that require specialist understanding.

The duty of disclosure extends to these assets — a party who omits cryptocurrency holdings or unvested equity from their financial disclosure is in breach of that obligation regardless of the practical difficulties of valuation. Courts have shown a willingness to draw adverse inferences where undisclosed assets are subsequently identified.

Further reading: Modern assets in separation: crypto, equity, IP and complex holdings →

Financial disclosure and hidden assets

The duty of financial disclosure in family law proceedings is not voluntary and is not limited to what a party chooses to reveal. It is a comprehensive legal obligation enforceable by the court.

Where a party suspects that assets have been concealed or undervalued, several mechanisms are available. Subpoenas can be issued to third parties — banks, accountants, company registries, and the ATO — requiring production of documents. Orders for examination of parties and witnesses under oath can be sought. Forensic accountants experienced in asset tracing can be engaged to analyse financial records and identify anomalies.

Courts have broad powers to respond to non-disclosure. Where assets are found to have been concealed, courts can make adverse inferences about the value and extent of concealed property, adjust the settlement to reflect the prejudice caused, award costs on an indemnity basis, and in appropriate cases set aside consent orders obtained on the basis of false or incomplete disclosure.

Further reading: Financial disclosure in high-value property settlements: how hidden assets are uncovered →

What complex property settlement looks like in practice

In a complex property matter where there is genuine dispute about the composition and value of the asset pool, the typical sequence involves several stages. Initial financial disclosure is exchanged between the parties. Where business or trust interests are in issue, forensic accountants are briefed and valuations are prepared. The parties and their lawyers review competing valuations and attempt to narrow the issues. Mediation or a round-table conference is convened — often with the forensic accountants present — to attempt a negotiated resolution.

In many complex matters, settlement is reached at or before this stage. The parties negotiate final figures, terms are documented in consent orders approved by the court, and the matter concludes. The process from initial disclosure to resolution might take anywhere from six months to two years depending on the degree of dispute and the complexity of the asset structures involved.

Where settlement cannot be reached, the matter proceeds toward a final hearing. In complex property cases involving contested business valuations, trust issues, and significant overseas assets, litigation timelines extend substantially — two to four years from commencement to final hearing is not unusual in genuinely contested matters. This is one reason why early, well-structured negotiation — supported by good forensic accounting and experienced legal advice — is almost always preferable to litigation.

How Koffels approaches complex property matters

Property settlement involving significant business interests requires a legal team with genuine commercial understanding, not just family law knowledge. Understanding how a private company is structured, how a discretionary trust operates, how a shareholder agreement allocates rights, and how CGT roll-over relief applies to property transfers requires breadth of legal capability that not all family law practices can bring.

Koffels is a full-service firm. Our family law practice works directly with our corporate, commercial, and tax lawyers when a matter requires it — without referring the client elsewhere or assembling an ad hoc team. We have established relationships with senior forensic accountants and valuers who work at the complex end of the market and understand what is required in proceedings.

We act for a limited number of clients at any time in this practice area. That is deliberate. Complex property matters require senior-level attention throughout.

Speak with us in confidence

If you are facing a property settlement involving business interests, trust structures, or significant assets, we invite you to contact us for a confidential discussion. There is no obligation, and what you tell us is privileged.

This page is intended as a general reference only and does not constitute legal advice. Property settlement outcomes are highly fact-specific. You should seek advice from a qualified family law solicitor in relation to your particular circumstances. Koffels Solicitors and Barristers, Level 23 Angel Place, 123 Pitt Street, Sydney NSW 2000.

Property Settlement and Business Interests