Important Documents to Discuss with Your 18-Year-Old (and Your Estate Planning Attorney)
Authored by Eric Van Der Hyde, CFP®, RICP®, ChFC®, CLU®
If your household is anything like mine, this time of year brings with it a flurry of personal family activities and changes – summer vacations, back-to-school shopping, adjusting to new team sports schedules, and all the information sessions and welcome events that accompany a transition to a new school year. While my family isn’t quite there yet, for many, this time involves packing up and moving their son or daughter into college. The information contained in this month’s blog post is geared towards those families who have young adult children.
Turning 18 is a time of great change and newfound independence – accompanied by the freedom to vote, and a time when many graduate high school, begin college, trade school, or enter the military or the workforce. Amidst these exciting life changes, it's essential for young adults to prioritize estate planning, particularly concerning healthcare proxies and financial powers of attorney.
Important Health Care Documents
When your child turns 18, they gain full control over their healthcare decisions. However, this autonomy can be a double-edged sword. Without a HIPAA Release or Health Care Power of Attorney, you will not have authority to access your adult child’s medical records, or the ability to make health care decisions on behalf of your adult child in the case they become incapacitated.
The HIPAA Release provides parents access to medical records and information, and while some facilities may offer their own form at the time of treatment, it is advised that individuals have a general HIPAA release drafted and executed.
The Health Care Power of Attorney (also referred to as a health care proxy) authorizes a person or persons (presumably the parents) as the adult child’s legal agent to make medical decisions on their behalf in the case of incapacity. Without one, parents likely will have to petition the court for guardianship to make healthcare decisions for their child.
Financial Durable Power of Attorney
To conduct financial matters on an adult child’s behalf, the parent must be named as an agent in the child’s Financial Power of Attorney. This document specifies what types of financial powers the parent will have on behalf of the child, and specifies when such powers would take effect. For example, the document could be drafted to provide standing powers, which go into effect immediately upon the execution of the document, or in such a way that these powers only go into effect if your child becomes incapacitated.
Educational Records Release
The Family Educational Rights and Privacy Act (FERPA) Waiver (also known as an educational records release) gives a parent, or other individual, access to educational records such as report cards, disciplinary actions, test results, and attendance records. Colleges usually have a specific document for this purpose, allowing students to authorize the school to release education information to parents.
In Summary
Estate planning for 18-year-olds and young adults may seem like an early and daunting task, but it's a crucial step toward responsible adulthood. In addition to the documents already discussed, there are other documents, such as a Will or even Trust that may be appropriate based on your and your child’s situation. Consult with an estate planning attorney to help you navigate what is appropriate for your adult child’s situation and to help you prepare and execute these documents. Once signed, be sure to keep these documents in a safe place where you can find them in the event you need to present one to a physician, hospital, financial institution, or college.
While it is certainly a busy time of year, ensuring that your child has these important planning documents in place when they turn 18, and before heading off to their next chapter, is a proactive and responsible step. These legal documents empower your child to make informed decisions about their healthcare and finances while providing you with peace of mind, knowing that their best interests are protected in case of unexpected events. By discussing and encouraging these important aspects of estate planning, parents can help their children navigate the complexities of adulthood with confidence and security.
To locate an estate planning attorney in your area, reach out to your financial advisor or search for a local attorney via the American College of Trust & Estate Counsel Website.
Neither Raymond James Financial Services nor any Raymond James Financial Advisor renders advice on tax issues, these matters should be discussed with the appropriate professional.
Opinions expressed in the attached article are those of the author and are not necessarily those of Raymond James. All opinions are as of this date and are subject to change without notice. Prior to making an investment decision, please consult with your financial advisor about your individual situation.
