For our clients with children or minor dependents, the prospect of transitioning them on to college or other post-secondary endeavors is sure to come faster than they imagine. While legal protection for minors is fairly cut and dry, once your child turns 18 – the age of majority in the U.S. – parents no longer have any legal right to information regarding their children, medical or otherwise. While your financial planner can help you put a plan in place to protect your accounts and assets, no number of financial resources in the world can always protect your biggest asset – your children. Your child’s college or university may have sent a list of things to pack for their dorm room, but more important than coordinating bedding and binder colors is making sure your child signs much-needed estate planning documents before they leave the nest.
As a result of the Health Insurance Portability and Accountability Act (HIPAA) and other privacy laws, parents no longer have the right to access children’s grades, receive tuition bills, or obtain information regarding their child’s health and well-being, even if the child is still considered a dependent for tax purposes, and even if the parents are footing the bill for the child’s education and medical expenses. Without specific written consent and authorization, schools and medical advisors are strictly prohibited from sending tuition or medical expense-related invoices or information to parents.
While many who work with a financial or estate planner might understand the importance of Durable Powers of Attorney, these same documents are essential for adult children to sign in order to designate an agent (typically their parent) to make important medical or financial decisions on their behalf in the event that they are unable to do so themselves. A Durable Medical Power of Attorney is the only instrument to ensure that you are able to act on your child’s behalf in matters of healthcare decisions, medical evaluations, or treatment. Likewise, a General Durable Power of Attorney allows your child to designate you as their financial agent.
While your child may or may not have personal property or a sizable asset portfolio, a comprehensive GDPOA covers much more than just that. It provides a way for you as the agent to contact financial service providers, vendors, utility providers, and other services you may find it necessary to deal with. These documents are especially urgent for young adults hoping to move across the country away from parents, or even travel or study abroad. Consideration should be paid to where they are relocating, as different states have different requirements, and certain schools even have their own forms for this purpose. You want to consider completing these documents in the state to which they’re moving.
In a perfect world, parents would never have to rely on these forms. However, it’s always better to be prepared. Investing a little bit of time to obtain these documents will ensure peace of mind as your young adult prepares to embark on the next chapter of their life. Listed below are basic estate planning documents you might want to consider. Your financial planner will be able to recommend a qualified estate attorney to assist with estate planning. Current and prospective clients of The Wealth Conservancy should contact us to learn more.
Medical Durable Power of Attorney (MDPO)
This power of attorney applies specifically to the designation of an agent who can act on behalf of your young adult in the matters of healthcare decisions, medical evaluations, and treatment.
General Durable Power of Attorney (GDPO)
A General Durable Power of Attorney designates an agent who can act on your young adult’s behalf in financial and property matters if they are unable to do so themselves.
Authorization for Release of Protected Health Information (HIPAA)
The HIPAA release appoints authorized recipients for the purpose of disclosure of personal health information by any of your young adult’s medical professionals.
You may also want to consider the following estate documents:
Advance Medical Directive (Living Will)
This document outlines your young adult’s wishes should they have a condition that is deemed terminal or require life sustaining treatment. While these discussions may be difficult or awkward, it’s important for them to think ahead and engage in conversation with you about their wishes. It’s important to note that their MDPO can include a provision that would allow the medical agent to override the Living Will.
Federal Education Rights and Privacy Act Release (FERPA)
FERPA protects your young adult’s education records from disclosure without their permission. This includes disclosure regarding tuition bills and grades, but also healthcare records if they receive care from an on-campus clinic. If your young adult attends college, they can complete a FERPA release that would allow you to access to these otherwise privileged records.
A Will
If your child is a beneficiary to a trust, a trustee, or an inheritor, working with an estate attorney to draft a comprehensive will for the distribution of their financial assets is a necessity. Drafting a will gives your young adult a way to designate personal or inherited assets to people that are important to them, and to do so in a way that will shelter those assets from hefty taxation. Perhaps your child has siblings or close friends to whom they wish to leave things. These wishes may go unfulfilled in the absence of a will.