Many Korean immigrants use joint tenancy with their spouse or children as their estate plan. For example, a husband and a wife own a property as joint tenants. If the husband dies, the wife will have 100% ownership of it; likewise, if the wife dies, the husband will have 100% ownership. After a spouse's death, the other spouse assigns their child as joint tenants.
In this case, joint tenancy is widely used since a spouse or a child can inherit estates without going through the probate court. However, considering various situations that can happen in life, joint tenancy is not the perfect estate plan.
First, as soon as you assign someone as a joint tenant of your property, you will share rights to the property with the joint tenant. It means that you will lose control of some portion of the property. It is no longer your separate property but a shared property with the joint tenant.
Second, when a joint tenant, such as your spouse or child, has serious health issues, you must visit the court to set a conservatorship to address ownership issues if you have not received any authorization letter from the joint tenant.
Third, when a joint tenant dies, and other joint tenants want to sell a house, if the house price increases, there will be more capital gains taxes.
Fourth, if you want to sell your real estate or take a loan on the real estate, you cannot take any action without the agreement signature of the joint tenants. For instance, if Mrs. Kim assigned her son as a joint tenant for her house when her husband passed away, she could not sell her house or take out a loan without his agreement.
Fifth, if some joint property tenants develop a severe medical problem or die around a similar period, the rest of the tenants' families must visit the probate court to inherit the property. Recently, a client from a different race visited my office. His mother passed away while taking care of his father in cancer. Soon after, his father passed away because of the disease as well. His father and mother were joint tenants of their estates, so he did not think he would go to the probate court to inherit them. However, since they passed away without any estate plan, he had a lot of concerns and stress.
Thus, in the case of a married couple, you should convert your property into community property or community property with the right of survivorship and make a living trust regarding the converted property. You should be prepared for any changing situations in life.