Summer brings longer days, hotter temperatures, thoughts of vacation, and graduation parties. For those hosting graduation parties, or for those in whose honor those parties are held, it’s an opportune time to consider Estate Planning. Many high school graduates head off to college in the autumn and these newly minted adults need to have some of the most basic Estate Planning documents in place before their departure. Although some clients put off Estate Planning for themselves, sometimes it’s easier to convince them to consider it for their adult children. It’s unlikely that those adult children would think of it on their own. Instead, those adult children might be considering the courses that they will take, how their dating life will evolve, or who will share a room with them. Given that parents feel responsible for their children well into adulthood, those parents can facilitate Estate Planning for their children.
A basic Estate Plan mandates what happens both during your life and at death and consists of a Living Trust, also known as a Revocable Trust (a “Trust”), a Will, a Property Power of Attorney (“POA”), a Healthcare Power of Attorney, a Living Will, and a Health Insurance Portability and Accountability Act (“HIPAA”) Authorization. Most young adults haven’t had the opportunity to accumulate wealth; thus, they may be unwilling to consider creating a Trust or Will (although both make sense for other reasons). For example, in most states if an adult child dies owning assets, then those assets pass to the child’s parents. If that’s the desired outcome, then a Will doesn’t change anything; however, if the child wants assets to go elsewhere, then the Will addresses that. While many young adults hesitate to create a Will or Trust, it should be easier to convince them to create a POA along with a Health Care Power of Attorney, Living Will, and a HIPAA Authorization. In fact, many firms advertise this type of package for clients who are sending their children off to college. Note that these types of plans make sense for any young adult, not just those heading off to college.
Usually, the adult child names their parents as the agents in the POA, although they can name any other qualified individual. If the child expresses concern about naming their parents because they are reluctant to give the parent that much power, the child can request that the POA prohibit access to grades or anything else the child desires. If the child wants to limit the power given to the agent, the attorney could draft a springing POA. A springing POA gives the expressed powers to the agent only upon incapacity of the principal, effectively “springing” into action then. A durable POA on the other hand is effective immediately and gives the agent considerable flexibility. It allows the principal to act anytime to undertake actions for the child’s convenience. For example, the child might have left a car at home. A parent acting under the durable POA could sell the car. Note that in most states the agent acting under a POA needs to act in the principal’s best interest.
In addition to the POA, the child should execute a Healthcare Power of Attorney. This is especially important as accidents and injuries are more prevalent in the college-aged group. The Healthcare Power of Attorney will let healthcare providers know who to contact should the child suffer an injury and be unable to provide consent for necessary or recommended procedures. Further, once that child turns eighteen, the doctor will not speak with the parent any longer and the parent will no longer have access to immunization records or other health forms. The child will need to do this when they have not previously had this responsibility. By signing the Healthcare Power of Attorney, the child gives a parent, or another named individual, permission to access these records. The HIPAA authorization grants healthcare providers the ability to share healthcare information with others. Finally, the Living Will authorizes termination of life support when there’s no reasonable chance of recovery for the individual. While difficult to consider, especially for young adults whose life is just beginning, it’s necessary.
Remember that attaining the age of eighteen carries legal significance. There’s no better way to acknowledge that than by encouraging the newly minted adult to sign legal documents that lay out instructions regarding management of their health and finances. Reach out to me regarding creating this plan for your adult child.