Last month I had the privilege of observing oral arguments made before the California Supreme Court involving the divorce of Frankie Valli, who is a member of the musical group, The Four Seasons. His case has a lot of relevance to married couples, as the issue is whether the form of title of an asset controls whether or not an item is community property or separate property.
Generally, all assets acquired during a marriage are community property. Of course, there are exceptions to that rule. For example, inheritance received by one spouse, unless transmuted to community property, is the separate property of the spouse who received the inheritance. Often a husband and wife may put the asset in only one spouse’s name. For example, an automobile is purchased and only one spouse is present at the time of purchase. The title will be placed in the spouse’s name who was at the dealership. The question becomes, Does title control, make it the separate property, or is it community property? The presumption has been, as long as the purchase was made with community property funds, the car belongs to the community. However, the Marriage of Valli raises the possibility that it might not be considered community property.
During his marriage, Frankie took out a life insurance policy on his own life. In doing so, he put title of the policy in his wife’s name and purchased it with community property funds. When the Vallis divorced after twenty years of marriage, the cash value was almost $400,000.00. Frankie asserted it was a community property asset, and his wife, Randy asserted it was her separate property. The trial court sided with Frankie and ordered that it be divided equally. Randy appealed the ruling and the Court of Appeal found that the form of title prevailed, meaning that because Randy was listed as the owner of the policy, it was her separate property. Frankie appealed, which brought the issue to the Supreme Court.
The Supreme Court’s decision will be an important ruling. If the Supreme Court upholds the Appellate Court decision, then how a couple took title to personal property will raise an issue in a subsequent divorce. A word of caution though, just because title is in the name of only one spouse does not mean the community loses all interest. In the Valli’s case, even if the Court upholds the Appellate court decision, the community will still be reimbursed for the money expended for the insurance premium payments. This means Randy won’t get 100% of the money, but she will receive more than 50%. My prediction is that the court will overturn the Appellate Court and align with the trial court’s decision. We’ll see in a couple of months.
Pamela Edwards-Swift, Certified Family Law Specialist, 2010, 2011, 2012, 2013 & 2014; Southern California Super Lawyer