The New York Times has reported that Joe Paterno has transferred the ownership in his home to a trust naming his wife as trustee for $1. The transfer took place in July, a few months before the Penn State sexual abuse scandal.
Unfortunately, for Joe it may not work and if he’s sued and found liable the house could probably be used to satisfy the judgment. This is because there are federal and state laws against “fraudulent conveyances” which is defined as the intent to defraud creditors. The creditor in this situation would be the victims if they’re successful in court showing him to be personally liable for the abuse.
However, the advice that Joe received is good strategic legal advice. There are many advance estate planning techniques that incorporate shielding an individual’s personal assets from judgment creditors. Some of the more popular are Family Limited Partnerships, Family Limited Liability Companies and using the state exemption or homestead laws. But the time to implement this sort of planning is well before the hint of any possible liability or likelihood of a lawsuit. For Joe and his wife, it may be too late and he may find it difficult to prove that he didn’t make this recent transfer to avoid any possible liability from a scandal that was brewing for over a decade.
Jeffrey A. Field as an Attorney, Accountant, Certified Financial Planner® and Certified Tax Coach® has an extensive background that gives him a unique perspective when helping clients with their estate, tax and financial planning needs. Give us a call – 818.369.7900
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