Apparently behind the Penn State scandal there is some speculation about an “estate planning” move made by the 84-year-old Joe Paterno in July this year.
The move: a $1 sale of his $600,000 home to his wife in July.
Here are two articles on the topic:
What struck me about these posts are the comments – many of which reveal that the supposed liability avoidance theory is most patently false.
A house owned jointly by a husband and wife (called Tenancy by the Entirety) is the most secure asset from creditors/lawsuits you can find – the only creditors that have a shot at it are joint creditors to both spouses. Unless Mrs. Paterno was a co-coach with Joe at Penn State, the transfer of the house makes no sense from an asset protection perspective.
The most intriguing part of this whole story is the 101 opinions on this topic (all over the map) – and the silly speculation of the initial writers of the news articles. These stories should give readers pause before accepting the initial conclusions of journalists on tax topics like this – it may be that authors are actually clueless on the topic.
My vote: it was standard estate planning at work, an attempt to divide up the estate assets to take advantage of each spouse’s federal estate tax exemption. Just bad timing.