Use attached to reproduce.

This is not an issue. Performing Begin/End update disposes of all elements along with the globally declared item. You need to check if the item is disposed of:
void ContextMenuOpening(object sender, ContextMenuOpeningEventArgs e)
{
    if (menuItem.IsDisposed)
    {
        menuItem = new RadMenuItem();
        menuItem.Text = "Custom menu item";
        menuItem.Click += menuItem_Click;
    }
    e.ContextMenu.Items.Add(menuItem);
}