June 6, 2014 By Paul Wallin

Frankie Valli and his wife Randy Valli separated after a 20-year marriage. Before divorcing, Frankie used funds from the couple’s joint bank account to buy a $3.75 million insurance policy. They named Randy, as the sole owner of the policy and its beneficiary.1

Frankie Valli

The couple decided to purchase the policy when Frankie was in the hospital due to a heart problem. In case he died, they decided to put it under the wife’s name so that she would take care of their children.

During the divorce, the court ruled that the insurance policy was community property. This meant that upon divorcing, the policy would be awarded to the husband and he would be forced to buy out his wife’s interest in the policy for $182,500.

Randy appealed, arguing that the policy was solely in her name so it should be separate property. Frankie said that the insurance policy was community property because it was purchased with the couple’s community funds during the marriage. The wife argued that the policy was her own separate property because it was put solely in her name.

The Court of Appeal agreed with the lower court’s decision that the insurance policy was community property and not the wife’s separate property.

California has very distinct definitions of separate property and community property between married persons. Let’s take a look at some of the differences between community and separate property in a marriage.

Separate Property vs. Community Property in California

Under Family Code Section 770, separate property of a married person is considered

  • All property owned by the person before marriage;
  • All property acquired by the married person during the marriage by a gift or inheritance; and
  • The rents, issues and profits of separate property.

One exception to the gift rule of separate property is if, for example, the husband bought an expensive necklace or ring for the wife. Under Family Code Section 852, if the gift’s value is high in comparison to the couple’s financial situation, it is not considered separate property. Even when the husband gives the gift to the wife, it remains community property as long as it was purchased with the couple’s community funds.

The general rule under California Family Code Section 760 is that all property acquired by either spouse during a marriage is considered “community property.” Randy Valli argued in the case of her life insurance policy that it was not community property. She argued that her husband used money from their community bank account to purchase a separate property asset for her.

The court ruled that Family Code Section 760 is straightforward. All property acquired by a married person during the marriage is considered community property. California has always been a         community property state, meaning that anything acquired during the marriage belongs to both the husband and wife.

Call the Divorce Lawyers at Wallin & Klarich Today

We understand that a divorce includes much more than just a married couple parting ways. It means fairly and justly dividing your property according to California’s complicated family laws. This is why it is important to have an experienced California divorce lawyer guide you through this difficult process. With over 30 years of experience, the attorneys at Wallin and Klarich can help get you through this difficult time.

With offices located in Orange County, San Bernardino, Los Angeles, Torrance, Riverside, West Covina, Victorville, Ventura, San Diego and Sherman Oaks, our knowledgeable attorneys are available to help you no matter where you work or live.

Call us today at (888) 749-7428 for a free phone consultation. We will get through this together.

1. http://www.courts.ca.gov/opinions/documents/S193990.PDF

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