Community Property Presumptions and Importance of Title
In the May 2011 case of Irmo Valli, the Court of Appeals reversed a family trial court’s judgment that an insurance policy that was taken out during marriage and paid for with community property was community property. The Court of Appeals said that the insurance policy was the separate property of the wife, who was the named beneficiary on the account.
In California, property acquired during marriage is presumed to be community property. Family Code 2550 requires the family courts to value and divide equally the parties’ community property estate. However, before the court can value and divide property, it must characterize that property as community, quasi-community, or separate. The date in which property is acquired and the title in which the property is taken are key aspects to the characterization of property. Separate property includes are property acquired before marriage, after the date of separation, or by gift, inheritance, and so forth. Since property acquired during marriage is presumptively community property, the party claiming a separate property interest in something acquired during marriage must overcome the presumption by a preponderance of the evidence. However, the specific act of specifying a form of ownership in the conveyance of title may remove the property from being presumably community. If the title of property is taken in only one party’s name, it is the party asserting the community has an interest in the property to prove by clear and convincing evidence that the property is jointly owned.
In Valli, although the insurance policy was acquired during marriage, it was acquired in the wife’s name only. The Court of Appeals said that the presumption of title ownership trumped the presumption of community property under California Family Code 760.
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