When it comes to divorce, one of the most contentious issues that may arise is that of property division. While it may prove to be relatively simple to decide who gets the china and who gets the crystal, items of more significant monetary value may prompt heated arguments and general acrimony. When it comes to something as important as a life insurance policy, how would a couple going through divorce in California determine whether this constitutes as community property?
In 2004, Frankie Valli, former lead singer of 60s pop group The Four Seasons, separated from his wife of 20 years, Randy Valli, and they subsequently divorced. There has been an ongoing dispute between the couple over a $3.75 million insurance policy on the singer’s life, which he took out in his wife’s name a year before they separated. At the time the policy came into being, he stated that his wife would be the sole owner and beneficiary.
During the divorce proceedings, a judge in Los Angeles County ruled that, since the policy had been obtained using money from a joint checking account, it was community property. He assigned ownership to Valli, on condition that Valli pay his ex-wife $182,500 for her share. A Court of Appeal found in favor of Randy Valli, but a Supreme Court recently overturned that ruling.
A law passed in 1984 states that, for one spouse to relinquish his or her share in the ownership of community property, a written verification must be properly drawn up. While, for most people, the value of such an insurance policy is likely to be significantly less, the principle is still the same. In order for one spouse to safeguard any type of property purchased using joint marital funds, getting such an agreement set down in writing is crucial. If divorce is a subject currently on a California resident’s mind, it may be worth looking into whether such safeguards are in place, and if not, then it may be advisable to obtain appropriate advice and guidance.
Source: sfgate.com, “Frankie Valli wins divorce case in California Supreme Court“, Bob Egelko, May 16, 2014