Lynette Berg Robe, ACFLS President 12711 Ventura Blvd., Suite 315 Studio City, CA 91604 portia1000@aol.com

December 20, 2013 The Honorable Chief Justice and Associate Justices of the California Supreme Court 350 McAllister Street San Francisco, CA 94102-4797 Re: Request to Depublish In re Marriage of Burwell Court of Appeal of California, Fifth District (F064265) Opinion Filed 10/31/13, Modified 11/21/13 Dear Chief Justice Cantil-Sakauye and the Honorable Associate Justices: I. Introduction

The Board of Directors of the Association of Certified Family Law Specialists (ACFLS) respectfully requests that Section II of the opinion in Marriage of Burwell (the “Opinion”) be depublished.1 The Opinion sets forth rules for characterizing community and separate property interests in term life insurance policies in a marital dissolution action.

1 Section II is titled “The Policy Proceeds Cannot be Characterized on this Factual Record.” The remaining sections of the Opinion were not certified for publication, except for Section I (“Cynthia is a ‘Party’ for Purposes of Appellate Standing”).

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California Family Law is already complicated, and the Opinion adds another dimension of needless complexity which will further backlog trial courts and trap the unwary. The Court of Appeal recognized the problem created by its “unfortunately intricate methodology for allocating proceeds of term life insurance policies” and by acknowledging that “this holding is burdensome.” (Opinion filed 10/31/13, p.2 & p.23, fn.20). Term life insurance policies are commonly owned by married couples. Thus, the Opinion is likely to have widespread effect on the characterization, valuation, and division of the community estate as a whole in many family law actions for years to come. II. Statement of Interest

ACFLS has no financial interest in the outcome of this action. ACFLS is a non-profit statewide association formed in 1980-81 – shortly

after the State Bar adopted the Family Law Specialization program. Approxi-mately 648 attorneys who have been certified as Family Law Specialists by the State Bar of California, Board of Legal Specialization belong to ACFLS. The Association monitors issues of interest to Family Law Specialists, develops and promotes family law practice skills, and provides advanced educational programs for the bar and judiciary. Our members appear in all courts throughout California.

ACFLS has an amicus committee co-chaired by two members who are dual-certified as appellate specialists and family law specialists. (E. Stephen Temko (counsel for movant and appellant) is a co-chair of the ACFLS Amicus Committee but recused himself from participation in all discussions and actions regarding this case from the inception.) The ACFLS Board of Directors approved this letter.

ACFLS has appeared numerous times as amicus curiae in state and federal appellate courts. In addition to filing amicus briefs, ACFLS has requested publication and depublication of opinions affecting family law litigants, courts of the family law bar, and has support grant of Supreme Court review in impor-tant cases. The ACFLS Family Law Specialist (formerly ACFLS Newsletter) has

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been cited in opinions of the California Court of Appeal. ACFLS does not advocate for a particular outcome with respect to the parties in any case; rather, ACFLS amici briefs and letters express our members’ concerns about issues of importance to family law attorneys and litigants throughout the state. III. Timeliness

The Opinion was filed October 31, 2013, and became final 30 days there-after. (Cal. Rules Ct., rule 8.264, subd. (b).) The Opinion was modified on November 21, 2013, but the modification did not extend the date of finality because no change was made to the appellate judgment. (Id., subd. (c)(2).) A request to depublish may be made no later than 30 days from the date the Opinion became final. (Id., rule 8.1125, subd. (a)(4).) Accordingly, the deadline for this request is December 30, 2013. IV. Argument

The Opinion does not meet the standards for certification under Rule 8.1105 because, instead of clarifying existing law, it establishes a new rule which is inconsistent with the law and which is needlessly complicated, creating an enormous burden for litigants, practitioners, and judicial officers in Family Law courts.

The Opinion discusses several published decisions relating to the characteri-zation or valuation of term life insurance policies in a marital dissolution action, such as Marriage of Spengler, Estate of Logan, Biltoft v. Wootten, Modern Woodmen of America v. Gray, Marriage of Lorenz, Marriage of Elfmont, and Marriage of Gonzalez. The Opinion correctly notes that these decisions mostly disagree as to the proper method of dealing with term life insurance policies. Rather than attempting to harmonize these cases or bring clarity to the process, the Opinion went an entirely new direction.

Effectively, the Opinion holds that the survivor benefits paid under a term life policy are characterized depending on whether the premium was paid with community or separate funds in the year of death, and based on other complicated

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factors discussed below. Extended term policies (10-year, 15-year, or 20-year terms) are popular, so a long-term reservation of jurisdiction may be required to determine the character of any survivor benefits paid on the policy after the court enters the judgment of dissolution if the parties cannot agree on the disposition of the policy. In Marriage of Epstein (1979) 24 Cal.3d 76, 88, this Court held that it would approve of retentions of jurisdiction for “a year or two of the court's decree” to determine the actual income tax consequences to the parties. In contrast, the Opinion could require the retention of jurisdiction for the life of the policy, which may be 10 or 20 years. Such a rule creates an unreasonable burden on Family Law courts and families as well as the probate courts, where these cases may end up if a party dies and there is a dispute over the policy benefits.

The Opinion is legally wrong with respect to its determination that the character of the last dollar used to pay premiums on a policy determines the character of any resulting benefit claim upon the death of the insured life. The Opinion characterizes the term life insurance policy’s right of renewal as an enforceable contractual right and a property interest, thereby giving the commu-nity an interest in the policy. It indirectly analogizes term life insurance policies to pensions, requiring that the death benefit proceeds be apportioned based upon a “burdensome” formula whereby the survivors will be required to offer evidence as to:

➘ The character of the funds used to make the final premium payment during the period during which the insured died.

➘ The insured’s health when the separate estate began paying the premiums such that the court can determine whether it was such that he or she could have purchased a comparable policy at a comparable price.2

2 How this is to be determined retroactively is very problematic. One can imagine the dueling expert physicians opining on the state of the deceased’s health 15 years earlier and the effect that some condition might have had on his or her insurability and premiums.

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➘ Whether the insured could have purchased a comparable policy at a comparable price when he or she began paying the premiums with separate property.

➘ The total amount of premiums paid on the policy.3

➘ The percentage of the premiums paid on the policy with community monies.4

➘ The effective premium discount for final term of coverage.

And, this evidence must be collected after the insured has died – perhaps 20 years after the policy was purchased and/or the marriage ended. In all likelihood, such evidence will be unavailable. Since substantial sums may well be at issue, lengthy trials can be expected.

The Opinion also missed an important point. With a multiple year term policy, there is no annual right to renew. The policy is a contract for the entire time period. With an individual year-by-year policy, there is no automatic right to renew unless the contract provides for it; and, even so, this would simply create a new one-year policy. Still, the Opinion treats a typical 10-year term policy as 10 separate annual contracts. Viewing the policy as a collection of annual contracts is detrimental to the community if the contract was made during marriage. Ordinarily, we look to the inception of the right to characterize property, tracing the property back to the time it was acquired.

There are additional foreseeable consequences to the Opinion. If the Family Law court reserves jurisdiction over the policy and the insured later cancels or permits it to lapse, it is likely that the former beneficiary will claim the insured

3 The Opinion actually requires the survivors to establish the amount of the premiums paid by the first community, the separate property of the insured, and the amount paid by the insured’s subsequent community(ies). 4 Given that courts will be looking up to 20 years into the past, how will anyone be able to prove when the community stopped making the payments and when the insured began using separate funds?

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breached his or her fiduciary duty. Since fiduciary duty continues until the asset is divided, the claim could have merit. Thus, we will have yet more litigation.

In addition, attempts will be made to restrict the insured’s ability to name his or her new spouse and children as the beneficiaries of the policy. Since the insured has a duty to provide for his or her current family and is using community earnings (with the new spouse) to make the premium payments, of course he or she would want to name them as beneficiaries. Yet, the insured may be unable to protect them given the former beneficiary’s reserved claim.

The Opinion opines in dictum that if the insured is uninsurable when he or she began paying the premiums with separate property that the policy is com-munity property subject to apportionment. How is the policy to be apportioned? We don’t know how long the insured will live, who will make the payments, or whether the policy will be in force upon his or her death? Are we going to require insureds to take physicals so we can determine their insurability upon divorce?

Without any discussion or explanation, the Opinion measures the former community’s interest in the “premium discount” inherent in term life insurance policies as a share of the death benefit proceeds. In the example given at pages 22-23 of the Opinion, the community would receive 30% of the one million dollar policy ($300,000) despite having gotten full value for all payments made during marriage and not having made a premium payment for as much as 10 years.

At page 22, footnote 19, the Opinion admits that its approach will require expert testimony. That is true. In fact, it will require at least two experts and probably more. It will require an expert insurance broker to opine on the avail-ability of comparable policies on the date the insured began making payments with separate property and premium discounts. It will also require a physician familiar with insurance company policies to opine on whether the insured’s “health was such that he or she could have purchased a comparable policy at a comparable price when the separate estate began paying the premiums.” It may also require an actuary to determine the present value of the policy on the date the insured began making payments with separate property and a CPA to make all of the calculations. And this is in virtually every case.

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There are at least a half a dozen court of appeal opinions that suggest different methodologies for dealing with term life insurance policies. Although there is a need for clear guidance in this area of the law, the Opinion only complicates matters. It should be depublished.

Respectfully submitted, By: Lynette Berg Robe, ACFLS President cc: ACFLS Amicus Committee Members (by email)

Leslie Ellen Shear, co-chair Joseph J. Bell Fredrick S. Cohen Garrett C. Dailey Mary Lynne Fisher Shane Ford Dawn Gray Christopher C. Melcher Dianna Richmond Katherine Stoner Stephanie Williams

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PROOF OF SERVICE BY MAIL I am employed in the County of Los Angeles, State of California. I am over the age of 18 and not a party to the within action. My business address is . On December , 2013, I served the foregoing documents described as LETTER REQUESTING DEPUBLICATION, on the interested parties in this action by placing a true copy thereof in sealed envelope(s) addressed as follows: Fifth District Court of Appeal 2424 Ventura Street Fresno, California, 93721 E. Stephen Temko Attorney at Law 1620 Fifth Ave., Suite 800 San Diego, CA 92101 Stacy H. Bowman Bowman & Associates 2032 17th Street Bakersfield, CA 93301-4324 Catherine E. Bennett Klein, Denatale, Goldner, Cooper, Rosenlieb & Kimball 4550 California Avenue, 2nd floor Bakersfield, CA 93309 I am readily familiar with the firm’s practice of collection and processing correspondence for mailing. Under that practice, it would be deposited with U.S. postal service on that same day with postage thereon fully prepaid at , California, in the ordinary course of business. I am aware that on motion of the party served, service is presumed invalid if postal cancellation date or postage meter date is more than one day after date of deposit for mailing in affidavit. I declare under the penalty of perjury under the laws of the State of California that the above is true and correct. Dated: December , 2013