Beam v. Bank of America
Supreme Court of California
490 P.2d 257 (1971)
Mr. Beam (plaintiff) and Mrs. Beam (defendant) were married for 29 years, during which neither worked outside the home: Mrs. Beam kept house, and Mr. Beam managed his sizable inherited investments, which paid for the family's living expenses. Over those 29 years, the investment principal grew only modestly, from about $1.63 million to $1.85 million, far less than the roughly $4 million the trial court calculated it should have reached at a normal rate of return. Because the investments underperformed even a passive benchmark, the trial court concluded none of the growth was attributable to Mr. Beam's own skill or effort, and classified the entire investment as his separate property. Mrs. Beam appealed.
Whether income and growth from a spouse's actively managed separate investment property remains separate property when that growth is attributable to a normal rate of return rather than to the managing spouse's own skill or effort.