Transitioning From Youngster to Young Adult: 18-Year Olds Have Estate Planning Needs, Too!
As high school graduation parties come to an end, priorities for parents and students begin to shift to college: shopping for dorm room essentials, planning for orientation, etc. There are plenty of questions running through parents’ minds: What will he major in? Who is her roommate? Is my child really ready for college? Where did the time go? Since most college freshmen have turned 18 and reached the age of majority, there are other important legal issues to address, too.
In most states, 18-year olds are considered independent adults with the right to privacy and the full legal responsibility to make their own decisions about medical and financial matters, and more. Parents are no longer automatically entitled to their adult children’s property, to make their medical or financial decisions, or to have access to their medical, financial, or educational records, unless authorized by the child. As such, it is important to work out an agreement with your 18-year old concerning what you will be able to decide on his/her behalf and what you will have access to — and then ensure that these agreements are captured in the appropriate legal documents before your child leaves home.
Imagine just one example of the need for such documents: if your child were to be hospitalized for an illness or injury, you would have no legal authority to make treatment decisions or receive any information from the health care providers without a health care power of attorney and signed HIPAA authorization, respectively. Hopefully, your child will not face any catastrophic circumstances at college. But, it is still wise to prepare the following legal documents to be ready for anything:
Financial Power of Attorney
With a financial power of attorney (FPOA), your child can authorize an individual to carry on his/her financial affairs and act on his/her behalf to protect property. Typical tasks that may be covered by an FPOA include paying bills, writing checks, making deposits, selling or purchasing assets, and signing tax returns. Note that a durable financial power of attorney remains in effect even if your child were to become incompetent or incapacitated.
Health Care Power of Attorney & HIPAA Authorization
The health care power of attorney (HCPOA) allows your child to name an individual who will have the power to authorize or refuse health care options if your child is incapable. Each state has its own HCPOA document, but any HCPOA is effective only upon incompetence or incapacity.
The HIPAA authorization allows health care providers to release medical information and records to anyone named in the document.
As mentioned, even though you are the parents, medical personnel can’t accept treatment authorization or share health status/medical information with you unless you are named in a signed HCPOA and HIPAA authorization, respectively.
A living will articulates an individual’s specific health care preferences in the event they suffer a terminal illness or permanently unconscious state and cannot make their intentions known. Many people use a living will to authorize their physician to withhold artificially or technologically supplied nutrition or hydration if:
- The individual is in a permanent unconscious state; and
- Their physician and at least one other physician who has examined them have determined, to a medical certainty, that artificially or technologically supplied nutrition and hydration will not provide comfort or relieve pain
Even if you, as the parent, are aware of your adult child’s wishes regarding life support, without a legally binding document signed by your child, you will not have the authority to direct the doctor’s actions.
Last Will & Testament
The last will and testament documents how someone wishes his/her estate to be managed and distributed after death. Although many young adults may not have many assets yet, a will ensures that personal property and money will be distributed according to their wishes, rather than per state law. The will also appoints an executor who will collect all the assets and then distribute them as stated in the will.
Before your child leaves for college, take the time to discuss the importance of these documents and have them created for your young adult. 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. And, as always, if you have any questions, please do not hesitate to contact your wealth advisor here at Truepoint Wealth Counsel!