high asset divorce mistakes

Mary J. Blige has had a very successful career as an R&B artist, television personality and entrepreneur. And like in her songs, her love life has had its share of ups and downs. Currently, she finds herself in the middle of a divorce from her estranged husband, Martin Isaacs, who also happens to be her business manager.

Two days before Blige and Isaacs married, they entered a prenuptial agreement that apparently would severely limit Isaacs’ right to certain property Blige obtained prior to their marriage (they married in 2002, long after she had become a superstar recording artist) and perhaps to spousal support as well. Fast forward to 2017 and of course Isaacs wants to argue the prenuptial agreement is not valid, in his case because he entered it under duress (too close to the marriage) and without understanding what he would give up.

It remains to be seen whether the judge will set aside the prenuptial agreement, but for the moment the judge did order Blige to pay Isaacs $30,000 per month in temporary spousal support (what we call maintenance) while the case is pending. Isaacs had asked for $129,000 per month!

If this case played out in Missouri, the court would determine whether the prenuptial agreement was entered into freely, voluntarily, with full disclosure and the opportunity to consult with an attorney. While our courts have found some prenuptial agreements invalid when too close to the actual wedding, our courts have also upheld some entered only a few days prior to the wedding. While the proximity is an important factor, it is not the only factor. Often, the facts show that while the signing took place close to the marriage, the negotiations over the terms took place for weeks or months in advance. If that is what happened in the Blige case, it is unlikely it will be held unenforceable. On the other hand, if she dropped a huge document just two days in advance of the wedding, including hundreds of pages of financial disclosures, and Isaacs could not get to an attorney to review it, he might have a stronger case.

Can a prenuptial agreement limit or eliminate maintenance? Yes, so long as under the circumstances it does not seem unconscionable. So, if it seemed reasonable and knowing at the time of entry but by the time of divorce the spouse seeking support cannot work and has no financial resources, maintenance would be necessary and the prenuptial agreement could be set aside.

Can a prenuptial agreement cut off access to certain marital property? Yes. Parties can agree to waive the right to certain marital assets in advance of a marriage. For example, if Blige wanted to keep all of her royalties from record sales during the marriage, Isaacs could agree to that and a court would uphold it. However, if a marriage lasts a long time and establishes a certain standard of living and the prenuptial agreement leaves one party with only 10-15% of the marital assets, that could trigger a finding of unconscionability.

To insure that a prenuptial agreement has a good chance of holding up in court, make sure both parties have attorneys, both parties participate in the negotiation of the terms, both parties fully disclose their financial holdings and liabilities, and both parties enter the agreement far in advance of the wedding.

Blige and Isaacs had a business relationship as well as a personal relationship, which makes their divorce even more entangled, because Blige really is the main asset of the business. In these situations, to avoid losing a large part of your business to your spouse, consider not only putting provisions related to the business in the prenuptial agreement but also in a separate partnership agreement or employment agreement.

Finally, Blige and Isaacs have financial issues with the IRS apparently; the degree of taxes owed and the health of the business at issue are in doubt. So, Isaacs could be playing with fire by attacking the prenuptial agreement, as he may end up finding himself on the hook financially for more debt than he otherwise would have been. We will watch what happens and update you in a future post.

If you have questions about prenuptial agreements and divorce, contact us – we can help.