Earnings After Effective Date of Agreement Also Separate Property. 1. Earnings During Marriage--Passive Income. Passive income derived from property of any type shall have the same character for purposes of this agreement as the property from which it is derived. Thus, passive income from Separate Property earned or accruing after the effective date of this agreement shall be the Separate Property of the owner of that asset. Likewise, passive income from marital or community property shall have that character once earned or accrued.
a. The term "passive income" means dividends, capital gains, interest, rents, royalties, disruptions and other income accrued from property of a party and obtained after the effective date of this agreement.
b. The term "passive income" also includes accrued but unrecognized appreciation in the value of capital assets classified as separate property.
c. In the case of ownership of interests in corporations as separate property, all dividends therefrom are to be considered passive.
d. In the case of ownership of interests in trusts and partnerships which do not operate a business enterprise, all distributions and income allocations therefrom to a party are to be considered passive.
e. In the case of ownership of interests in trusts, partnerships, limited liability companies (LLCs) and like business entities which operate a business enterprise, all distributions and income allocations therefrom to a party are to be considered passive unless a party materially participates in the business. Where a party materially participates in a business operated by a trust, partnership, LLC, or like business entity, all income and distributions from said entity are to be treated as earned income.
f. Income not falling within the definition of "passive income" is to be considered earned income and treated as set forth in the next section entitled, "Earnings During Marriage--Earned Income".
