Transitioning to Adulthood: Estate Planning Essentials for Young Adults Turning 18

At 18, your child has officially reached the threshold of adulthood. Amid celebrations of this milestone birthday, however, there is another important consideration that should not be overlooked: the legal implications of becoming an adult. 

In most states, turning 18 marks the beginning of legal adulthood. At this age, young adults generally gain the right to make their own medical, financial, and other personal decisions, meaning their parents no longer automatically have the authority to manage their finances, make medical decisions on their behalf, or access their medical, financial, or educational records.  

In fact, permission or appropriate legal documentation may be required to grant parents these rights—making it important that families discuss these matters sooner than later, especially if the child is moving out or headed to college. If a college student is suddenly hospitalized because of an accident or serious illness and hasn’t given their parents the appropriate legal authorization, the parents may be unable to obtain medical information or make health care decisions on their child’s behalf.  

A signed HIPAA authorization can permit designated individuals to receive protected medical information, while a Health Care Power of Attorney (HCPOA) can authorize a chosen representative to make medical decisions if the student becomes incapacitated. By identifying who should be authorized to act on the young adult’s behalf and who may access confidential information, families can put the necessary legal documents in place before a situation is an emergency. 

Although no one wants to think about the possibility of an urgent situation, preparing in advance can help families navigate unexpected circumstances. The following estate planning documents are worth considering as a young adult enters this new stage of life.

1. Financial Power of Attorney (FPOA)

A Financial Power of Attorney (FPOA) allows a young adult to appoint a trusted individual to manage specified financial matters on their behalf. Depending on the document terms, the appointed agent may be authorized to pay bills, write checks, make bank deposits, buy or sell assets, and sign tax returns.

A durable FPOA can remain effective if the young adult later becomes incapacitated and is unable to manage their own financial affairs. The scope of authority and the circumstances under which the document takes effect depend on its language and applicable state law. 

Having this document in place can help ensure that essential financial responsibilities are managed if the student becomes unable to handle them independently. 

2. Health Care Power of Attorney (HCPOA) and HIPAA authorization

A Health Care Power of Attorney (HCPOA) allows a young adult to designate someone to make medical decisions on their behalf if they become unable to make or communicate those decisions themselves. The document establishes who may act as the individual’s health care representative and is generally governed by state-specific requirements. 

A HIPAA authorization serves a different but equally important purpose. It permits health care providers to disclose protected medical information to the individuals identified in the authorization, subject to its terms. 

Parents may assume that they retain access to their child’s medical information and decision-making authority simply because they are the parents. Once their child reaches adulthood, however, that authority is generally no longer automatic. Appropriate documentation can help ensure that parents or other trusted individuals are able to receive medical updates and participate in decision-making when authorized legally. 

3. Living will

A living will records an individual’s preferences concerning certain medical treatments if they develop a terminal condition or enter a permanently unconscious state and can no longer communicate their wishes. 

Depending on state law, a living will may address decisions about life-sustaining treatment, including artificially or technologically provided nutrition and hydration. For example, an individual may specify circumstances under which such measures should be withheld or withdrawn when medical professionals determine that the treatment will not provide meaningful comfort or relieve suffering. 

Parents may already know their child’s personal views regarding life support and end-of-life care. Nevertheless, verbal discussions alone may not provide the legal authority needed to carry out those wishes. A properly completed advance directive helps document the young adult’s preferences and provides guidance to health care professionals when difficult decisions arise. 

4. Last will and testament

A last will and testament explains how an individual wants their property and assets distributed after death. Although many young adults have relatively modest estates, they may still own bank accounts, vehicles, personal belongings, investments, or other property that they want distributed in a particular way. 

Without a valid will, the distribution of property is generally determined by applicable state intestacy laws rather than the individual’s personal preferences. A will can also name an executor, the person responsible for administering the estate, handling relevant obligations, and distributing assets according to the will and applicable law. 

Creating a will at a young age allows individuals to establish their wishes early and provides an opportunity to revisit the document as their financial circumstances and family responsibilities change. 

Preparing for the next chapter 

When your child reaches the age of 18, it’s a perfect time to discuss these important legal and estate planning considerations. Taking these steps can help clarify expectations, protect the student’s privacy, and establish a plan for handling financial or medical emergencies. 

Although it is ultimately up to your child to choose whom to name as the power of attorney, authorized party to receive medical information, executor, etc., most families will be in agreement that the parents are the ideal selection at this point in a young adult’s life. Completing these documents is certain to give all of you some peace of mind. If you have any questions or would like to discuss your family’s unique estate planning needs, we are always happy to talk.