## Facts

- Barbara and Daniel Spengler married in 1967.
- During the marriage, Daniel obtained employment with Mid-Valley Dairy Company, which provided a group term life insurance policy as an employment benefit.
- The group plan allowed renewal without proof of insurability, but the record did not show a contractually enforceable, vested right to renew coverage indefinitely.
- In 1982, Daniel was diagnosed with prostate cancer and became effectively uninsurable for comparable private coverage.
- The parties separated in 1986 and later dissolved their marriage; Daniel continued the group term coverage after separation and after dissolution.
- In 1989, Daniel married Rose Spengler and changed the policy beneficiary designation to Rose.
- Daniel died a few months later; Rose, as the named beneficiary, received $100,000 in policy proceeds.
- Barbara sued Rose, claiming a community property interest in the proceeds because the policy originated during marriage and the community allegedly contributed to maintaining Daniel’s insurability and coverage.

## Issues

1. Whether a former spouse is entitled, under community property principles, to one-half of the proceeds paid post-dissolution on an employment-based group term life policy that began during marriage but was maintained after dissolution.
2. Whether the absence of a proven vested, enforceable right to renew or retain coverage limits any community property claim in the death benefit as against a subsequent spouse who is the named beneficiary.
3. How courts should distinguish between community contributions during marriage and post-dissolution separate contributions and contingencies in characterizing life insurance benefits.

## Decision

- The Court of Appeal reversed the judgment awarding Barbara one-half of the $100,000 proceeds.
- The court held that Barbara was not entitled to one-half of the full death benefit on the record presented.
- The case was remanded for further proceedings consistent with the appellate opinion.

## Legal Principles

- A policy obtained during marriage may involve community property interests, but the death benefit is contingent on continued coverage and later beneficiary designation.
- Not all economic benefits associated with employment-based insurance remain community property after dissolution; characterization depends on what the community actually acquired and what rights survived.
- For group term life insurance tied to employment, a community claim to post-dissolution proceeds is weakened where the insured did not have a demonstrated vested, enforceable contractual right to renew or maintain coverage.
- Courts must distinguish community contributions made during marriage from post-separation and post-dissolution maintenance of coverage and related risks and costs, particularly when proceeds are paid to a named beneficiary rather than an estate.
- A trial court errs by treating the entire post-dissolution death benefit as fully community property subject to a simple one-half division absent evidentiary and legal support for that characterization.

## Conclusion

The court rejected a blanket rule that a former spouse automatically retains a one-half community interest in the entire proceeds of an employment-based group term life policy that began during marriage, when continued post-dissolution coverage and payment were separate and no vested renewal right was shown; the award granting the former spouse half the proceeds was reversed and the matter remanded.


In re Marriage of Spengler, 5 Cal. App. 4th 288 (Ct. App. 1992)