## Facts

- A husband and wife married in 1984 and separated in 2004.
- During the marriage, the husband used funds from a joint bank account to buy a $3.75 million life-insurance policy on his life.
- Premiums were paid from the same joint account, treated as community funds.
- The policy listed the wife as the sole owner and beneficiary.
- In dissolution proceedings, the trial court characterized the policy as community property and awarded it to the husband with an equalization payment to the wife equal to half the cash value.
- The Court of Appeal reversed, treating the policy as the wife’s separate property based on title.
- The California Supreme Court granted review to determine whether title alone could change characterization absent a statutory transmutation.

## Issues

1. Whether a life-insurance policy acquired during marriage with community funds is community property or one spouse’s separate property when the policy is titled solely in that spouse’s name.
2. Whether taking title in one spouse’s name, without more, effects a valid transmutation under Family Code § 852.
3. Whether the community-property presumption under Family Code § 760 is overcome in dissolution by form of title alone.

## Decision

- The California Supreme Court reversed the Court of Appeal and reinstated the trial court’s community-property characterization.
- The Court held the policy was community property because it was acquired during marriage with community funds and no valid transmutation occurred.
- The Court ruled that listing the wife as owner and beneficiary did not, by itself, satisfy the statutory requirements to change the property’s character.
- The matter was remanded for proceedings consistent with the opinion.

## Legal Principles

- Property acquired during marriage is presumed community property unless a statutory exception applies. (Fam. Code § 760)
- A transmutation of real or personal property is invalid unless made in writing with an express declaration by the spouse whose interest is adversely affected. (Fam. Code § 852(a))
- When spouses use community funds to acquire an asset and take title in one spouse’s name, characterization in dissolution is governed by the community-property presumption and the transmutation statute, not by title alone.
- Form of title may be evidence of intent, but it does not change characterization between spouses at dissolution without compliance with § 852’s express written declaration requirement.
- A claimed interspousal “gift” of an asset purchased with community funds does not avoid § 852 when the dispute is between spouses over characterization in dissolution.

## Conclusion

An asset purchased during marriage with community funds remains community property in dissolution unless the spouses complete a written transmutation that satisfies Family Code § 852; titling the asset in one spouse’s name, without an express written declaration by the other spouse, is insufficient to convert it to separate property.


In re Marriage of Valli, 58 Cal. 4th 1396 (Cal. 2014)