Important Property Characterization Opinion from Cal. Supreme Court

hl-admin Blog, Community property, Property division, Separate property 0 Comments

The long awaited Valli opinion has been issued by the California Supreme Court.

In the case husband and wife purchased a life insurance policy insuring husband’s life.  There was no dispute the life insurance policy was purchased during the marriage, and with community property money.  Ordinarily there would be no discussion.  The policy would be characterized as community property.  In this case though wife alone was listed as the owner of the policy on all the paperwork.

When the divorce commenced the parties then began arguing over who was the legal owner of the policy.  Husband said he and wife were co-owners under community property law.  Wife argued because husband voluntarily put the policy into her name alone, he transmuted it (i.e., transferred it) to her, as her separate property.  Another important legal argument wife asserted in support of her case was that she was the sole owner under the title presumption of Evidence Code Section 662, because it was in her name only.

The Supreme Court decided the life insurance policy was community property.  On the transmutation argument the Court writes that a separate writing between the spouses — beyond just the policy purchase paperwork — is required for their to be an effective transmutation between spouses.  Historically i think the case will have more significane for the concurring opinion written by Associate Justice Chin.  In his concurrence Associate Justice Chin resolves the wrestling match between the family code and the evidence code.  In family law cases family code statutes control over other competing statutes:

[t]he section 760 presumption controls in characterizing property acquired during the marriage in an action between the spouses.  Section 662 plays no role in such an action.  The detailed community property statutes found in the Family Code, including section 760, are self-contained and are not affected by a statute found in the Evidence Code.

Please click here to read the Valli opinion.

For more information on California family law please visit www.hardinglaw.com.

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