Divorce With Respect

Is a life insurance policy community property in California?

On Behalf of | Jun 5, 2014 | English, Family Law, Firm News | 0 comments

One of the most contentious aspects of any divorce can be the division of property, especially when a couple is wealthy or has complex assets that must be separated. Not only can it be difficult to come to terms with splitting finances and properties, but even determining whether something is considered community or separate property can present a challenge.

California is a community property state. This means that everything purchased during a marriage generally belongs to both spouses. There are some exceptions, including property that has been transferred to one person’s name, and it can be very confusing for spouses to understand their rights when it comes to dividing assets. For example, famed singer Frankie Valli and his ex-wife recently went through a significant litigation to determine whether an insurance policy belonged one or both of them.

According to reports, the Four Seasons singer was married to his wife for 20 years before they separated in 2004 and then divorced. The insurance policy in question was purchased in 2003 with the couple’s money in a joint account. It would seem fairly simple to determine that the $3.75 million policy would be considered community property.

However, Valli and his ex-wife battled over ownership of the policy. Even though it had been purchased with money from a joint bank account before the couple considered splitting up, Valli had named his then-wife as the sole owner and beneficiary of the policy. This, according to his ex, makes the policy her separate property.

However, after trial & appeals, the California Supreme Court ruled that the policy is considered community property, even though it was put solely in the wife’s name. To be considered separate property, Valli would have needed to complete a written declaration that transferred his share of the policy to his wife.

This case highlights how quickly a divorce can get complicated, even when it seems very straightforward. Having the support of an attorney can be crucial, as many divorces can bring up complex issues that require a thorough understanding of state family law.

Source: SFGate, “Frankie Valli wins divorce case in California Supreme Court,” Bob Egelko, May 16, 2014