Category: Estate and Trust Planning
Five important documents every young adult should consider before starting college or a career
As children mature into young adults, a parent’s role also transitions from protector to advisor. Once your adult child is earning a living, they’ll need to attend to their own taxes and other financial affairs. And when a high school senior turns 18 and becomes an adult, it becomes more important than ever for parents to offer guidance and advice on the importance of estate planning. Having the proper legal documents in place before your adult child heads off to college or begins a new life and career can save precious time when it comes to making important medical and financial decisions in the event of a medical or other emergency.
Every adult should consider working with an estate planning professional to draft these five documents to give someone they trust the authority to act on their behalf if the unexpected happens.
Basic Will
As a parent, the last thing you want to think about is the death of a child. But as your eighteen-year-old leaves for college or begins a career and starts earning a living and having assets in their name, it’s important to have even the most basic documentation together that directs the disposition of assets and names someone to handle final affairs in the event of their death. Without a basic will in place, these activities will be controlled by state law.
Your child can work with an estate planning attorney to draw up a basic will. They will need to designate people who they would choose to receive any assets upon their death (such as siblings or other family members), and they will need to name an executor, which would often be a parent or a sibling.
Durable Power of Attorney
A durable power of attorney (or POA) allows a parent to handle an adult child’s financial matters if the child is unable to do so. While parents of college-aged children may already be paying tuition or handling the child’s bills, the durable POA provides actual legal authority to do so.
A durable power of attorney is preferred over a general power of attorney, as durable POAs do not expire if the person becomes incapacitated. It becomes effective immediately upon signing and remains in effect in the event of the child’s incapacity, saving time and money to establish legal authority should the unthinkable happen. The durable POA also authorizes the parents to transact on their adult child’s behalf when it comes to signing leases, opening accounts, or handling investments.
Health Care Power of Attorney
The next three documents work in concert to ensure that you can support your adult child in the event of severe illness or a medical emergency. The first of these documents is the health care power of attorney, which is also known as a health care proxy or medical power of attorney. This document gives a trusted person legal authority to make decisions about an individual’s medical treatment without court involvement if that person is unable to make decisions for themselves.
HIPAA Authorization
The second of the three important documents that your adult child needs in the event of a medical emergency is the HIPAA Authorization form. Once your child is a legal adult, a doctor cannot lawfully discuss their medical information with a parent without consent. The HIPAA authorization waives this protection so you can discuss your child’s medical situation with their doctor as the need arises. In the event of a medical emergency without this document, parents may be forced to petition a court to be granted authority to make decisions for their child. Having a HIPAA authorization form executed before tragedy strikes can save valuable time when it comes to making health care decisions for your adult child.
Living Will
The third important document for your adult child to have in place in the event of a health care emergency is a living will, which is also known as an Advanced Health Care Directive. The living will allows your child to state their wishes for end-of-life decisions, including life support, organ donation, authorization of an autopsy, and choice for disposition of their remains.
Legal parameters involving health care directives can differ from state to state, so it’s important to make sure that the document your child creates and signs complies with the laws of the state where your child is living or going to school.
Like other family events or milestones, having a child turn 18 is an occasion that should be shared with your accountant and other financial advisors so that they can offer your family proper guidance as to how to best prepare for this life event. These basic estate planning documents will equip your family with peace of mind as your newly minted adult child heads out into the world to make their mark.
To discuss estate and trust planning or income taxes, contact Heather Williams, CPA/CFP® at (941) 365-4617 or .
