## Facts

- John H. Elfmont (husband), a physician, and Edie M. Elfmont (wife) married in 1975 and separated on May 1, 1987.
- During marriage, the husband bought several term disability insurance policies and increased coverage over time; the policies renewed automatically if premiums were timely paid.
- All premiums paid before separation were paid with community funds.
- After separation, the husband paid renewal premiums from his separate property to keep the same term policies in force.
- The husband became disabled in 1989; benefits became payable in 1990, well after separation.
- The dissolution dispute centered on whether the post-separation disability benefits were community property in whole or in part.

## Issues

1. Whether disability benefits paid after separation under term policies originally acquired with community funds, but renewed after separation with separate funds, are community property in whole or in part.
2. Whether the community’s purchase of automatic renewal rights before separation creates a community property interest in later disability benefits.

## Decision

- The California Supreme Court affirmed the Court of Appeal.
- The Court held the community had no property interest in the disability benefits under these facts.
- Because benefits commenced long after separation and post-separation premiums were paid with the insured spouse’s separate property, and there was no evidence the renewals were intended to provide community retirement income, the benefits were the husband’s separate property.
- The Court rejected the argument that renewal rights acquired with community premiums, standing alone, establish a community interest in disability proceeds.

## Legal Principles

- Characterization of disability insurance benefits depends on the purpose the benefits were intended to serve: retirement-type income for the community versus replacement of the disabled spouse’s postdissolution earnings.
- Intent is assessed not only at initial purchase of disability coverage but also when decisions are made to continue coverage in force through renewals.
- For term disability policies, post-separation renewal and premium payment with separate property, coupled with the absence of evidence of a continuing retirement-income intent, supports treatment of later-paid benefits as separate property.
- Community-funded acquisition of automatic renewal rights does not, by itself, create a community property interest in disability benefits payable after separation.
- Decisions attributing community interests to term life insurance proceeds based on renewal rights do not control disability insurance characterization because disability benefits function primarily as wage replacement.

## Conclusion

The court held that disability benefits payable after separation under renewed term disability policies were the insured spouse’s separate property when the policies were kept in force with post-separation separate-property premiums and there was no showing that renewal decisions were intended to provide community retirement income.


In re Marriage of Elfmont, 891 P.2d 136 (Cal. 1995)