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Is Fraudulent Transfer in Joe Paterno's Playbook?

posted by Adam Levitin

No, fraudulent transfer isn't a fancy football term for a fake handoff.  That's a bootleg.  Instead, it's what you call a bs transfer of an asset to avoid creditors or when you are or are about to be rendered insolvent. And it looks like it might be part of Joe Paterno's playbook.  Whatever one thinks about Paterno's conduct at Penn State, it sure looks like he's trying out the fraudulent transfer play by selling his house to his wife for $1 plus love and affection.

The only reason I can see for the transfer is that JoePa thinks he's going to get the bejezus sued out of him, and he wants to be as judgment proof as possible. But maybe the love and affection are really worth $594,483.40.  

Comments

In most states creditors' have limited recourse against a debtor's homestead especially when held jointly with an innocent spouse. I assume this transfer is more of an estate protection strategy. For example protection from this scenario: Joe's wife dies first while holding title to the home as a joint tenant with Joe, Joe takes sole fee title to the home, his creditor's have an easier time recovering from the home before or after his death.

..or Joe and his wife are planning to sell the home soon and are trying to better protect the proceeds.

I don't know about Pennsylvania, but homestead exemptions often do not apply to criminal restitution orders.

I think that Pennsylvania recognizes tenancy by the entireties. If the house was owned in tenancy by the entireties, creditors of only one spouse could not get at the house. So the transfer may not have been fraudulent as to creditors

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