Whether assets are community property (belonging equally to both spouses, separate property (belonging wholly to one spouse) or mixed (partially separate and partially community) is an important issue when a marriage ends at death or divorce.

Let us consider some examples involving life insurance, retirement plans and home purchases where the lines can get blurred.

Any assets acquired while married and living together are presumed to be community property. Unless there is an express written declaration stating otherwise that is signed by the spouse whose interest is adversely affected, any asset acquired using community property funds – including marital earnings – is a community property asset regardless of whose name is on title as the owner.

In Marriage of Valli (2014), 58 Cal. 4th 1396, the California Supreme Court recently considered a life insurance policy purchased by a husband naming his then wife as both owner and beneficiary of the policy.

The court ruled that the policy was the couple’s community property and not the wife’s own separate property. Why?

The reasoning was that the policy was purchased with community funds and the husband had not signed an express written declaration saying that he relinquished his one-half community property interest.

The court held that the signed written declaration requirement still applied equally to purchases made by a spouse and not only to transfers of property between spouses.

Next, property interests acquired prior to marriage remain that owner’s separate property after marriage.

In Marriage of Green (2013), 56 Cal. 4h 1130, the California Supreme Court considered a husband’s military service credits, earned during his military service prior to marriage, which allowed him to purchase enhanced retirement benefits.

The court ruled that the credits were his separate property even though community property assets were later used to purchase the credits while married.

The court required the husband’s estate to repay the community property estate for the community funds the husband used to purchase his service credits. The reimbursement was a fraction of the husband’s enhancement to his retirement benefits.

Likewise, community property rights acquired during marriage can continue after the community has ended where a residual benefit remains.

In Marriage of Barwell (2013), 221 Cal. App. 4th 1, the California Fifth Circuit Court of Appeal considered a term life insurance policy purchased by a husband with community property funds.

The court ruled that the policy continued to have a community property interest after the marriage ended because the policy’s right of renewal was purchased during the first marriage using community property funds.

Accordingly, the policy proceeds had to be allocated between the community property estate of the husband’s first marriage and the husband’s separate property estate.

The husband’s separate estate had an interest in the policy too because he paid the insurance premiums on the renewed policy which is why the policy was in effect when he died.

Next, consider the purchase of real property by a single person before marriage where some or all of the subsequent mortgage payments are paid using marital earnings. What interests do the community and separate property estates have in the house?

The residence is the separate property of the person on title because the house was purchased using separate property assets.

However, because community property funds were then used to pay some or all of the mortgage payments, the community property estate was entitled to reimbursement.

Accordingly, any appreciation in the value of the real property benefits the separate property estate. Conversely, any deprecation in value hurts the separate property estate.

Either way the community property estate is entitled to reimbursement, nothing more and nothing less.

Dennis A. Fordham, attorney (LL.M. tax studies), is a State Bar Certified Specialist in Estate Planning, Probate and Trust Law. His office is at 870 S. Main St., Lakeport, California. Fordham can be reached by e-mail at This email address is being protected from spambots. You need JavaScript enabled to view it. or by phone at 707-263-3235. Visit his Web site at www.dennisfordhamlaw.com .