Attorney
Back in 2020, the late, great Jimmy Buffett released a catchy little tune called “Mailbox Money” about the joy of living off of royalty checks. If any other artist tried to write something similar it would come off as crass, but Buffett made it sound aspirational. Who wouldn’t want to cruise around on a boat and eat shrimp instead of working a 9 to 5?!
However, the laid back persona Buffett cultivated and celebrated in song is somewhat at odds with the lifestyle brand he built. The song is a wink to that, acknowledging that he could have coasted on his success, but he loved the work that he did too much. Buffett understood that putting in the hard work and building the right things up front gives you the flexibility you dream of in the long-run.
Royalties. Rent checks. Distributions. That sort of income shows up because of what you built in the past, not because of how many hours you logged this week. The disconnect between effort and income means these assets are often highly coveted or completely overlooked when the person or couple that owns them files for divorce.
Bob Matteucci always flags this as an issue when it pops up. And thanks to his business background, he knows how to treat these unique money makers.
Common Types of Passive Income in High-Asset Divorces
While Buffett sang about song royalties, passive income takes a lot of forms. In Albuquerque-area divorces, the most common include:
Rental income from residential or commercial properties — often the most visible and straightforward to document, but complex when there are multiple properties, mortgages, depreciation schedules, or LLC structures involved.
Business distributions and K-1 income — common among small business owners and partners. These can fluctuate significantly year to year, making it easy to understate or misrepresent what a business actually generates.
Investment income including dividends, capital gains, and interest — particularly relevant for couples who have built substantial portfolios over long marriages.
Profits from online businesses or digital assets — an increasingly relevant category in the current economy.
Royalties and licensing income from intellectual property, mineral rights, or creative work — less common but often high-value when they’re present.
Both parties to a divorce are required to identify these types of assets so they can be properly dealt with.
Asset vs. Income
As mentioned above, assets that generate passive income are either a top concern of divorcing couples or something that flies under the radar. How important an asset is to a couple often depends on whether they consider it more as an asset or a source of income. Sometimes it is difficult for people to understand that what must be divided is the value of shared assets, not the income they produce.
Say you own a rental property that brings in $4,000 a month. The court’s job isn’t to split that rent check in two going forward. It’s to determine who owns the property (and whether the value of it must be divided), what it’s worth, and how to manage the value division if the couple doesn’t want to sell it off.
Doing things correctly requires working with an attorney like Bob Matteucci who understands asset valuation, cash flow, and how income-producing assets are actually priced in the real world.
Passive Income Makes Ownership Messy
More problems arise as the income an asset generates blurs the line between marital property and separate property. Thanks to New Mexico’s community property law, all assets acquired during the marriage are considered marital property, and their value is subject to division at divorce.
That’s fairly straightforward. What is complicated is the fact that the law also considers income earned during the marriage to be marital property.
Consider a piece of rental property that was purchased before the marriage. It would generally be considered separate property, but any increase in value or income generated by its use during the marriage is marital property. To make matters even more complicated, using marital funds to maintain or improve the property also shifts the property as a whole toward the marital side of the equation.
The same logic applies to business distributions, investment income, and any other return on capital that built up during the marriage. What you built together belongs to both of you, even if only one name was on the account, the deed, or the operating agreement.
Serving Families with Dignity & Compassion
If you have rental income, business distributions, or other passive income streams, the decisions you make early in the divorce process have a long tail. If you want to keep that mailbox money rolling in, you need a combination of legal and financial advice that you can only get from a seasoned family law attorney like Bob Matteucci. Please contact Bob today to set up a meeting and discuss your case.