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Court Allows Husband’s Change in Insurance Life Insurance Policy Despite Violation of Court Order

California is a community property state. This means that in all California divorce cases, unless a specific statute says otherwise, all property acquired during the marriage is shared 50/50 by the couple, and it must be divided evenly.

Signed ContractThat being said, a recent California divorce case illustrates how a federal statute can supersede a family court order. In that case, the husband and wife agreed to an order requiring the husband to keep the wife listed as the beneficiary of the husband’s survivor and death benefits until another court order was agreed upon by them. The husband was an active duty service member at the time. Despite the order, six months later, the husband changed the beneficiary of his life insurance policy to his sister. The husband was terminally ill and died eight months later. After the husband’s death, his sister received the proceeds of the policy.

The husband’s life insurance policy was issued under a federal law:  the Servicemen’s Group Life Insurance Act of 1965 (SGLIA). The court found the SGLIA allowed the husband to change the beneficiary on his policy at any time without obtaining the wife’s consent or giving her notice. The court determined the SGLIA preempted state law. That is, although state law conflicted with federal law, the federal law prevailed. Since the SGLIA allows the service member to change the beneficiary “at any time and without the knowledge or consent of the previous beneficiary,” the husband had the right to change the beneficiary at any time, and the fact that the husband violated the order did not change the beneficiary of the policy.

Division of Property in California Divorce Cases

If a determination has been made that property is community property, it has to be divided equally between the parties. The court has to value, equally divide, and distribute such property between the parties. However, the parties can come to an agreement in writing by agreeing how they want to divide the property, and they may present the agreement to the court. In these cases, courts will generally honor validly entered agreements between the parties.

Property includes not only physical property like real estate, cars, and furniture but also bank accounts, tax refunds, bonds, and business interests. It also may include retirement benefits, life insurance policies, pensions, and other benefits. Some of these assets can be more valuable than any other property. Debts are also considered in the division of assets and have to be carefully reviewed as well.

Disputes often arise over whether certain property is community property or separate property, how much certain property is worth, and whether a division of property is equal. And as the recent California case demonstrated, understanding the complex consequences of conflicting laws may be very important in understanding the consequences of certain decisions. An experienced attorney is important to help spouses obtain a favorable outcome, whether through an agreement or by proceeding to trial.

Contact a San Jose Divorce Attorney

If you are going through a Bay Area divorce, or are considering initiating divorce proceedings, retaining a trustworthy and knowledgeable family law attorney is essential in obtaining an appropriate outcome. The outcome will likely affect the rest of your life. San Jose family law attorney John S. Yohanan has over 35 years of experience representing Northern California residents in family law matters. We can help you file for a divorce, obtain a legal separation, or resolve another family law issue. To set up a consultation, contact us at 408-297-0700 or through our online form.

Related Blog Posts:

California Court Finds Return from Deployment Does Not Confer Automatic Custody Benefit to Deployed Parent, Bay Area Divorce Attorney Blog, December 12, 2017

Court Upholds Parents’ Stipulated Agreement, Requiring California Father to Contribute to Children’s Medical Expenses, Bay Area Divorce Attorney Blog, November 20, 2017