Paterno Passed On Home to His Wife for $1

New York Times ^ | November 15, 2011 | MARK VIERA and PETE THAMEL

[Second Amendment First]

Joe Paterno transferred full ownership of his house to his wife, Sue, for $1 in July, less than four months before a sexual abuse scandal engulfed his Penn State football program and the university.

Documents filed in Centre County, Pa., show that on July 21, Paterno’s house near campus was turned over to “Suzanne P. Paterno, trustee” for a dollar plus “love and affection.” The couple had previously held joint ownership of the house, which they bought in 1969 for $58,000.

According to documents filed with the county, the house’s fair-market value was listed at $594,484.40. Wick Sollers, a lawyer for Paterno, said in an e-mail that the Paternos had been engaged in a “multiyear estate planning program,” and the transfer “was simply one element of that plan.” He said it had nothing to do with the scandal.

*

Experts in estate planning and tax law, in interviews, cautioned that it would be hard to determine the Paternos’ motivation simply from the available documents. It appears the family house had been the subject of years of complex and confusing transactions.

Lawrence A. Frolik, a law professor at the University of Pittsburgh who specializes in elder law, said that he had “never heard” of a husband selling his share of a house for $1 to his spouse for tax or government assistance purposes.

“I can’t see any tax advantages,” Frolik said. “If someone told me that, my reaction would be, ‘Are they hoping to shield assets in case if there’s personal liability?’ ” He added, “It sounds like an attempt to avoid personal liability in having assets in his wife’s name.”

[Second Amendment First]

I don't know of any reason for this type of transaction for "estate planning". It sounds to me like Paterno knew that potential liabilities were imminent, and he was protecting assets.

[Mamzelle]

I happen to know several similar transactions. It usually happens because the wife WANTS the property in her name. Why shouldn't she? Lots of wives do. It's a way for a homemaker to have property in her own name, and has a lot of legal tradition around it (dowries, inheritance). It's not much different from buying a spouse some big bling or a new car...

A half-mil is small change compared to the misery Paterno is going to be getting.

[Solaia]

There is no reason from an estate tax perspective. Even if he had no will, the house would pass to his wife. I’ve seen things like this done where one spouse is suffering from a mental disability, say alzheimers, but that doesn’t seem to be the case here.

[TheWriterTX]

Could be he has an illness that the public doesn't know of, and doesn't want it subject to taxes when he passes. My grandparents on both sides parcled out their estates prior to death to lower the total tax hit.

He could also be sheilding it for another reason altogether. This was before the scandle broke.

[They'reGone2000]

Doesn’t “Suzanne P. Paterno, trustee” indicate that their estate planning includes a trust?

Move along NY Times. Nothing to see here.

[Second Amendment First]

I think he will be facing some big lawsuits, hence the need to protect the home for his wife. If he were to die, the home would pass to her tax free if it is in both names.

Not saying there isn’t some other reason, but I’ve never heard of this as a common practice.

[apillar]

Actually a rather common practice if you have a good lawyer and investment planners and are expecting a huge lawsuit to come down the pike. I bet if you did some searching you would also find that recently most of his fortune and investment holdings have been transferred to trusts and shell corporations, on paper at least, he’s poor as a church mouse and it will be difficult if not impossible to every collect on a lawsuit against him. Not saying it’s right, but it IS smart.

[Second Amendment First]

OK, use of a trust in estate planning is a common practice.

[TruthShallSetYouFree]

There is no reason from an estate tax perspective.

I know that the estate laws have had some changes, but an attorney had me "sell" my half of our house to my wife for a nominal amount, a few years back. The reason was that whereas I had substantial assets in my name that would be passed through to my wife tax-free upon my demise, she had no such assets that would pass to my in the event that she died first. Apparently, there are some favorable tax consequences that would accrue to our children when the surviving parent eventually dies.

[If You Want It Fixed - Fix It]

Innocent or guilty, poor folks don’t get sued. Ands resigning politicians don’t either - See “Palin”

[Mamzelle]

More common than you think. I really can't comment on the Paterno, except to say that what sounds like a modest house for the Most Important Man in Pennsylvania isn't an asset dodge to put it into his wife's name.

I'd say this is behavior you'd see in a long term marriage, not the modern multi-marriage climate.

When you die, there is often complications for a surviving spouse accessing property that is assumed to be hers. If it's in her name, there's no problem. Usually the husband dies first, and there's no question about her being allowed to keep her house.

In today's profligate and high-divorce times, it might strike some as unusual. But in the old-fashioned sense, it is provident.

[italianquaker]

Smart move

[skeeter]

I read somewhere that despite being a big name in football compared to his contemporaries Paterno did not make alot of money.

[cuz_it_aint_their_money]

A half-mil is small change compared to the misery Paterno is going to be getting.

Particularly when you consider that Paterno will be drawing over a half-mil a year (every year) in his pension. (per Drudge Report)

[Second Amendment First]

Thanks for the insight. Estate planning has become so complex because of the ever changing tax laws. That’s why I listen to what my adviser tells me regarding my own situation. Apparently Paterno does also.

[org.whodat]

Not, this has been going on for a long time, since last spring, do you think they have not talked about getting called before the grand jury. He knew he was going to loose his butt for a good while.

[InvisibleChurch]

maybe he just loves his wife

[org.whodat]

ROFLOL, his retirement is over 500,000 per year.

[Second Amendment First]

I think in most cases, pensions receive special protection against lawsuits. See OJ Simpson.

[cuz_it_aint_their_money]

I read somewhere that despite being a big name in football compared to his contemporaries Paterno did not make alot of money.

According to the Drudge Report (which links you to an ESPN website): "His pay rose from $541,000 to $568,000 over the past three full calendar years."

Now, I don't know about you, but I consider that to be a rather LARGE sum of money.