Can Wrongful Death Damages Recovered by a Married Person Be Separate Property Under California Law?

Abstract

In the absence of an applicable statute, the approaches judges take in classifying recoveries based on personal injuries to a married person have changed substantially since 1922. A relatively new theoretical approach, which can be called “in-lieu tracing,” is now often applied. It asks what was lost by the victim-spouse that resulted in a recovery. For example, if an insurance company pays benefits to a husband on a disability policy and the husband cannot work due to metastasized cancer but is beyond normal retirement age, the payment is seen as in lieu of retirement benefits. Thus, the law applicable to classifying retirement benefits as community or separate would be employed, i.e., the payments would be traced to the premiums paid for the insurance. If no statute precluded application of inlieu tracing, a personal injury recovery based a spouse’s lost leg in a tortiously-caused accident during marriage would be classified by tracing the money to the leg—something the victim-spouse brought to the marriage. The amount of the total recovery based on the loss of the leg would be the victim’s separate property, even though the cause of action arose and payment was made during marriage.

This Article concludes that modern in-lieu tracing precedents require overruling the 1922 wrongful death decision and its progeny that bar potential tracing of a married person’s loss based on the death of a relative to a separate property source and that erroneously compel classifying all components of damages recovered as community property.

Conversely, another line of older authority under which all wrongful death recoveries had to be classified as community property does not need to be overruled. This line of cases began with a 1924 court of appeal decision and was based on language then found in section 376 of the California Code of Civil Procedure (Section 376). The 1924 court’s interpretation of Section 376 was unsound from the outset, as this Article demonstrates. In any event, in 1949 the statute was amended and the language was removed; this necessarily abrogated the second line of older precedents that mandated classifying 100% of a wrongful death recovery by a married person as community property.