Life Insurance Policy In Dissolution Of Marriage Proceeding.

During a 20-year marriage, the husband used community property funds to purchase an Life Insurance Policy on his life, naming his wife as the policy’s only owner and beneficiary. The trial court ruled the Life Insurance Policy was community property because it was acquired during the marriage with community funds. The trial court awarded the Life Insurance Policy to husband and ordered him to buy out the wife’s interest in the policy by paying her $182,500, representing one-half of the policy’s cash value at the time of trial. The appellate court reversed, holding that the Life Insurance Policy was the wife’s separate property. In a unanimous opinion, the California Supreme Court reversed the intermediate appellate court, stating: “We conclude that, unless the statutory transmutation requirements have been met [under Family Code section 850 et seq.], the life insurance policy is community property.” In reaching this conclusion, the court held that where the form of title presumption found in Evidence Code section 662 conflicts with the transmutation statutes, the latter apply, and the court left open the question of whether the form of title presumption would ever apply in a marital dissolution proceeding. In fact, Justice Chin’s concurring opinion, joined by Justices Corrigan and Liu, posed the question: “What role, if any, does a common law rule codified in Evidence Code section 662 have in determining, in an action between the spouses, whether property acquired during a marriage is community or separate?”  The concurring opinion answers its own question with: “Evidence Code section 662’s common law presumption does not nullify the community property statutes.” (In re the Marriage of Frankie and Randy Valli (Sup. Ct.; May 15, 2014) 58 Cal.4th 1396, [324 P.3d 274, 171 Cal.Rptr.3d 454].)