Estate Planning for Young Adults: What to Consider
If you or someone you know is preparing to send your young adult child off to university soon, it’s advisable to speak to a qualified attorney to learn more about how you can protect your family using Estate Planning for Young Adults.
I recently had a conversation with a friend whose oldest child was about to head off to university at the end of this summer. She was obsessing about everything from course selection to the color of her dorm room bed dressing. However, when I asked if all her child’s estate planning documents were prepared, I got nothing but crickets. This was followed by the most perplexed look and an inquiry as to why a teenager needed to have an estate plan.
At the risk of adding to my friend’s ever-growing to-do list, I explained that estate planning documents do more than help the uber wealthy avoid taxes. In fact, every one of us needs a personalized and comprehensive plan in place to protect not only our assets but ourselves and our loved ones as well.
Ideally, every university-bound young adult should have the following basic documents in place:
Last Will and Testament
This perhaps is an estate planning attorney’s hardest sell to parents of young adults about to leave home for the first time.
No one cares to think of the possibility of their child dying prematurely and needing a Will, but the fact remains that it is an important one. Although assets of university-bound young adults may be quite limited, a Will ensures that bank accounts, personal items and even social media accounts (be on the lookout for my upcoming blog on this topic!) are distributed and handled in the manner intended by the young adult testatrix (person executing the Will).
It also allows them to stipulate any funeral arrangements, as well as, other specific wishes to occur upon her passing.
Durable Power of Attorney
A financial power of attorney gives an agent (in this case a parent) the authority to make financial decisions on behalf of the maker/principal (the young adult child) in the event they are physically or mentally incapable of doing so themselves.
This document allows parents to carry on the financial affairs of their children, such as paying their rent, credit card bills, student loans, as well as, have access to bank accounts, when needed.
Typically, a Power of Attorney terminates if the principal becomes incapacitated unless it is a “Durable” power of attorney. To be considered a Durable Power of Attorney, the document must explicitly state that it may be used for an incapacitated maker and must have been executed during a time when the maker was fully capable to do so.
Durable Power of Attorney for Health Care
Similarly, a Durable Power of Attorney can be granted for healthcare purposes regardless of capacity. This document can be invaluable to parents of young adults who end up in the hospital since a parent’s decision-making role and ability to access information is considerably reduced once a child turns 18 years of age.
Imagine not being able to make medical decisions or obtain information if your child were to be hospitalized! In my opinion, if there’s one planning document that every university-bound young adult should execute, it would be this one!
However, a Durable Power of Attorney for Health Care should not be confused with a Health Care Surrogate Designation (HCSD) or Declaration of Living Will. While
A Declaration of Living Will, on the other hand, specifies the principal’s wishes as to medical treatment in the case of a terminal condition, end-stage condition or if the principal is in a persistent vegetative state. These documents are called “Health Care Advanced Directive” because they are made in advance of the principal’s incapacity. And although they serve a similar purpose, they are all equally as important since they take effect in different circumstances.
HIPAA Authorization and FERPA Release Forms
The Health Insurance Portability and Accountability Act (HIPAA) is a federal law governing, among other things, the privacy of all patient-identifiable health information. Therefore, to facilitate access to medical records and communication between parents and healthcare professionals or insurance companies, it is essential that university-bound young adults execute HIPAA Authorization form.
The Family Educational Rights and Privacy Act (FERPA) was enacted to protect young adults’ privacy. However, in the case of an emergency, parents may not have access to important records or be able to speak with school officials. To avoid parents being prohibited from accessing pertinent information at a time of need, a simple release can be executed by the young adult.
While providing unfettered access to a young adult’s financial, medical and educational records may be considered controversial, these documents undoubtedly provide necessary protection and access that can be invaluable in the event of an emergency. A well-drafted document will provide the desired access to parents while maintaining a level of autonomy and privacy for the young adult.
If you or someone you know is preparing to send your young adult child off to university soon, it’s advisable to speak to a qualified attorney to learn more about how you can protect your family.
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