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Is Life Insurance Marital or Separate Property?

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In the case of Frankie Valli v. Randy Valli, the California Supreme Court answered the above stated question: life insurance is marital property (community property according to California law) if purchased with marital funds.

This issue was presented to the Supreme Court of California after Randy Valli appealed the trial court’s ruling in her divorce from Frankie Valli, lead singer of the critically acclaimed singing group the Four Seasons. Specifically, the issue on appeal was the trial court’s ruling regarding a $3.75 million life insurance policy purchased by the singer for the benefit of his wife. During the divorce proceeding, Randy Valli argued that she should retain the insurance policy as her own separate property because the policy named her as the sole owner and beneficiary. The trial court disagreed and held that the policy was community property because it was acquired during the marriage with funds from the couple’s joint bank account. The trial court went on to divided the policy between the spouses by awarding the policy to Frankie Valli and ordering him to buy out his wife’s half at its cash value, $182,500.

Randy Valli appealed the trial court’s decision, and the California Court of Appeals agreed with her argument. The appellate court reversed the lower court’s decision and held that the policy was Randy’s solely, because the policy was in her name alone. Frankie then sought redress from the Supreme Court of California, and in its May 15, 2014 opinion on the matter, the Supreme Court sided with Frankie and the trial court holding: “[…] we agree with the trial court’s characterization of the insurance police as community property.”

Although this matter was decided according to California law, which is distinct from Georgia divorce law in that Georgia is an equitable distribution state, not a community property state, it would not be surprising for a Georgia court to come to a similar conclusion based on similar facts. According to Georgia law, marital property is subject to equitable distribution between the spouses upon divorce. Property, whether real property, personal property, assets or income, is deemed marital if it was acquired by the spouses during the course of the marriage. Moore v. Moore, 249 Ga. 27 (1982). Thus, in a case similar to the Valli divorce, a Georgia court would likely find that a life insurance policy purchased during the marriage with funds from a couple’s joint bank account was marital property subject to division, regardless of which spouse was listed as the owner or beneficiary.

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