Earlier this year, Mary J. Blige – the renowned musician and actress (recently nominated for her first Golden Globe) – was ordered to pay her ex-husband $30,000 per month in temporary spousal support. As the primary breadwinner in her marriage, she was also ordered to pay support retroactively, and to cover her ex-husband’s lawyer fees.
The situation is both typical and unique. As a recent article in Entrepreneur makes clear, many entrepreneurs and business owners involved in divorce actions are compelled, like Blige, to give up assets they acquired independently. Yet Blige’s case stands out. The extent to which her business interests and personal life intersect is somewhat unusual—she is her business, and built up her cache prior to her marriage.
Why, then, was her former spouse able to claim such a substantial portion of her earnings?
In North Carolina, you can own a business without owning it
When it comes to family law concerns in North Carolina, the concept of ‘business ownership’ differs somewhat from how it’s usually understood. Namely, an individual can essentially own a stake in an entity, even if s/he has made no formal investment or does not appear on the title.
This is true even in cases where one spouse owns and operates an entire business by him- or herself. If the business was started during the marriage, or if its value increased during marriage, the non-owning spouse may be able to claim a marital stake.
This was what happened in the case of Mary J. Blige’s divorce, though matters were complicated somewhat by the fact that her ex-husband had also served for a time as her manager.
Can business assets be protected?
Business owners who want to protect their assets from divorce actions have a potent means of doing so. Specifically, they can establish prenuptial agreements that stipulate how such assets will be divided, if at all, in the event that the couple splits up. (Similarly, postnuptial agreements can be used if the business is started after a couple has already wed.)
But it is important to consult with a lawyer on such matters. These agreements must be executed with diligence and care. Blige’s ex-husband challenged the prenuptial he’d been asked to sign; he claimed he hadn’t understood what he was consenting to, and that the contract had been drafted just two days before the wedding.
The family court judge deemed that the prenuptial agreement wasn’t enforceable. This likely enabled Blige’s former husband to collect the spousal support he sought.