For most young adults college is a huge step. It’s an opportunity to grow as they gain more independence and enjoy more personal freedom than they’ve had in their life. As parents drop their kids off for college in August and September, it’s a big step for them as well. They hope their child’s college experience will be filled with academic success rather than scenes from Animal House. While parents can’t control the entire college experience, they can make sure they have the ability to step in and act on their child’s behalf if necessary.
What most people don’t realize is once kids reach the age of majority—age 18 in most states—parents are no longer entitled to see their medical and financial records or make decisions on their behalf. This applies even if parents are paying for college or the child still lives at home. If your college aged child were to get hospitalized, or worse yet, lose the ability to make or communicate decisions, medical or financial professionals might refuse to consult or even release information to parents.
With that in mind, we recommend young adults have the following estate documents in place:
- Power of Attorney for Healthcare – The Power of Attorney for Healthcare is the most important document for students to have in place. The POA for Healthcare allows a parent (if named as the agent) to make medical decisions on their child’s behalf. There have been numerous cases where a child has become hospitalized and the hospital would not release any information to the child’s parents. In one case, a college-aged child got into a car accident which resulted in the child being in a coma for weeks. During that time, the hospital would not release medical information to the child’s parents. The parents had to sue to become their child’s temporary legal guardian to be involved in medical decisions. That process took valuable time and money, which only added stress to an already terrible situation.
- HIPAA Release– Another part of an adult child’s estate plan should be a HIPAA release. By signing a HIPAA release, your child allows their health care provider to discuss information about their location and condition to specified individuals. Without such a release, parents may face obstacles to even determine whether their child has been admitted to the hospital. Most major universities have a Release of Health Information form that students can sign as well.
- Power of Attorney for Property – The Power of Attorney for Property allows a parent to handle financial matters on their child’s behalf. The POA for property can be springing or general. Springing is initiated by an event (for example incapacity) while general allows the appointed person to access financial information as soon as the POA is signed. The Power of Attorney for Property could allow a parent to access all bank records, help pay a child’s bills, or speak to his or her landlord on their behalf. Which type to use really depends on the preferences of the child and parent.
We recommend each of our young adult clients have the above building blocks of an estate plan. Because most young adults have limited assets, at least having a Power of Attorney for Healthcare in place for protection during emergency situations is a good start. Most states have free statutory forms online that can be used, but when possible we recommend having a licensed attorney draft the documents. If you have specific questions about any of these documents and how they apply to your situation, please contact your wealth management team.
Neil Teubel, CFP® is a Senior Advisor at BDF and also leads the Financial Planning Committee. The FPC champions the continual improvement of the firm’s planning processes so that every client gets the most comprehensive and thoughtful planning possible. The committee ensures BDF’s team has cutting-edge tools and the latest information covering the entire financial planning landscape to best serve our clients. Neil received an undergraduate degree in Financial Planning from the University of Illinois Urbana-Champaign and a master’s degree in Personal Financial Planning from Texas Tech University, where he earned his CERTIFIED FINANCIAL PLANNER™ certification.