When I heard about the scandal at Penn State, I never imagined that it would lead to an Epilawg article on estate planning. But somehow, the topic of federal tax planning worked its way into this news story. An article on InvestmentNews.com reported that in July of 2011, Joe Paterno transferred his interest in the family home to his wife. While some individuals speculated that this was intended to protect the home from any upcoming civil law suits, InvestmentNews.com provides for Paterno’s legitimate estate planning purpose for the transfer. My takeaway from the article is two-fold:
1. I learned that Pennsylvania is a state that protects the home from creditors of one spouse, and
2. I was reminded of the uncertainty we will encounter in the next year with regard to the federal estate tax.
The uncertainty in item #2 is because the current federal estate tax exemption of $5 Million is scheduled to return to $1 Million in just over one year. Regardless of what the politicians do (or fail to do), individuals should review their estate plans and when possible, incorporate some flexibility into their legal documents.
