Celebrity crooner Frankie Valli recently ran into a legal spat with his ex-wife. The case made it all the way up to the California Supreme Court, and the high court’s ruling is likely to affect how judges classify life insurance policies in divorce proceedings.
Valli and his wife separated in September 2004 after 20 years of marriage. Before the split, Valli used money from the couple’s joint bank account to take out a $3.75 million life insurance policy and named his wife as the owner and beneficiary. He also used cash from the bank account to pay monthly premiums on the life insurance policy. During a hearing on the divorce, Valli’s wife testified that he took out the policy after being hospitalized with a heart condition. Valli told the court that he made his wife the beneficiary with the intention that she would use the money to help provide for their three kids in the event of his death.
A trial judge eventually ruled that the policy was community property, to be divided between Valli and his wife, because it was purchased with community funds from the couple’s joint account. The judge ordered Valli to pay his wife half of the value of the policy at the time of the separation. An appeals court later reversed the decision, however, holding that the policy was separate property that belonged solely to Valli’s wife. That left the state Supreme Court to weigh in.
Holding that the policy was community property, the high court said that the couple didn’t take the steps necessary to classify it as separate property in the eyes of the law. As the court explained, spouses may “transmute” property from community to separate status, but it must be done by a written declaration with the consent of the spouse whose property rights are being adversely affected by the move. Here, there was no such agreement.
“[T]he transmutation requirement of an express written declaration applies to wife’s claim, in this marital dissolution proceeding, that the life insurance policy husband purchased during the marriage with community funds is her separate property,” the Court said.
The Court also rejected the argument by Valli’s wife that the transmutation rule doesn’t apply to circumstances in which a spouse purchases property from a third party with the sole intent to give it to the other spouse. An exception for gifts, the Court said, is limited to property that’s not substantially valuable.
Valli may be a celebrity, but the legal issues that came up in his divorce are similar to those often encountered by regular folks. If you’re considering seeking a divorce in California, contact San Jose divorce lawyer John S. Yohanan. With more than 30 years of experience, Mr. Yohanan is an accomplished family law attorney who has helped a number of clients resolve separation dates and other issues on optimal terms. Call our office at (408)297-0700 or contact us online to schedule a consultation.
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