The Natural Enhancement of Separate Property During Marriage is Separate Property

In Estate of Ney, husband and wife were over 60 years old and retired when they married.  Husband brought into marriage $39,464 worth of stocks, bonds, and cash.  Husband died 14 years later.  In Husband’s will, he left $3,000 to his wife and left the remaining investments, then-worth $73,266, mainly to his sisters and nieces.  Wife’s lawyer claimed that the increase in the value of stocks during marriage was community property.  Wife’s lawyer argued that husband’s community efforts and skill in stock trading contributed to the increase in value illogical the trades occurred during marriage.  The court determined the investments to be Husband’s separate property.  Wife’s lawyer appealed.

The Court of Appeal affirmed by finding that during marriage the Dow Jones Industrial Average almost tripled while husband’s stock values did not even double.  The Court of Appeal found that although husband watched his stocks closely and read the Wall Street Journal daily, he did not have special investment abilities or skills. The Court of Appeal found that the increase in husband’s portfolio was predominantly due to the natural enhancement of his separate property, not his own efforts and skill, and thus, the investment portfolio retained its separate property character.

Estate of Ney (1963) 212 Cal. App. 2d 891