## Facts

- The parties were spouses in a divorce action involving equitable distribution.
- The wife maintained an Investment Management Account at Chase Lincoln First Bank that was treated as her separate property.
- During the marriage, the account increased in value.
- Evidence showed the appreciation resulted from the bank’s management, market forces, and a 1984 deposit of the wife’s inheritance from her father.
- The trial court awarded the husband 25% of the account’s appreciation, included in a distributive award totaling $96,989.50.

## Issues

1. Whether appreciation in the wife’s separate investment account was subject to equitable distribution when the increase was attributable to bank management, market forces, and an inherited deposit rather than either spouse’s efforts.
2. Whether the trial court erred by awarding the husband 25% of that appreciation and incorporating it into the distributive award.

## Decision

- The appellate court modified the judgment to eliminate the husband’s share of the appreciation in the wife’s separate investment account.
- The court held the appreciation was not due to the wife’s efforts, but to bank management, market forces, and the inherited deposit; therefore, the husband had no claim to the appreciation.
- The husband’s distributive award was reduced from $96,989.50 to $47,039.50.
- As modified, the judgment was affirmed without costs, and the wife’s remaining arguments were rejected as without merit.

## Legal Principles

- Appreciation of separate property is subject to equitable distribution only to the extent it is causally attributable to the direct or indirect efforts of a spouse.
- Passive appreciation driven by market forces or third-party management, without proof of spouse-driven value creation, remains separate property.
- Inherited funds are separate property; depositing inheritance into a separate account does not, by itself, convert resulting growth into marital property absent proof of effort-based appreciation.

## Conclusion

The court held that the wife’s separate investment account and its appreciation remained separate property because the increase during the marriage was passive and attributable to market forces, professional account management, and an inherited deposit, requiring removal of the husband’s awarded share of that appreciation and a corresponding reduction of the distributive award.


Brown v. Brown, 203 A.D.2d 912, 611 N.Y.S.2d 65 (App. Div. 4th Dep’t 1994)