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It feels like just a moment ago, my son was a toddler tugging on my skirt asking to be picked up. Now, that thought is comical as he stands six feet tall, much taller than I. He turned 18 in November and while I knew there were “things to do” before he left for college, it did not occur to me that I cannot wait until his sendoff in September. Turning 18 is the catalyst, not college. At 18, not only can he register to vote, join the military, gamble, travel alone, get a piercing and go sky diving or bungee jumping without my permission but he is legally responsible for his own life. What exactly does that mean? It means that there are medical, legal and financial implications to consider. To ease this transition into adulthood—for parents and teens alike—you want to obtain the following: health care related documents, a power of attorney, a Will and a passport.
Imagine this scenario… You get a phone call on a Saturday afternoon from your son’s best friend that he broke his ankle at the local park playing a pick-up basketball game. His friends called an ambulance because it “looked pretty bad” and then called you. When you get to the ER, the nurse asks your son’s age and when you say 18, he kindly informs you that he cannot give you any information about your son’s condition. Your son is an adult. A HIPAA form is a powerful piece of paper and invaluable when your child is in a health emergency. The HIPAA (Health Insurance Portability and Accountability Act) form allows medical professionals to share information about one person to another. In this case, the ability of a local ER or student medical center to share information with parents. Even if you are providing insurance for your child and paying the medical bills, without a HIPAA authorization, you will not receive any information about your child’s condition.
In the event of a more dire situation, if your child cannot make decisions for himself, you want to have a Health Care Proxy (HCP) designation in place. The HCP allows your child to designate someone to make medical decisions on his behalf if he is not able to do so. While parents may be the logical choice, this may not always be best if families are miles apart or (in hopefully a rare case) relationships are strained. An aunt, uncle or trusted family friend may also be appropriate. The final health related document needed is a Living Will (also called an “advance directive”). This document spells out your child’s wishes relative to life extending measures and intentions relative to organ donation. All three documents should be prepared, or at a minimum, reviewed by an attorney keeping in mind that many states differ in their requirements and language. As an extra precaution for your college student, when you drop your Freshman off for the first time, take him to the student medical center and ask to sign any university-specific forms that may be needed in addition to those mentioned above.
On a brighter note, consider the situation where your 18-year-old is visiting his girlfriend out of state and forgot to deposit his paycheck before leaving. He calls and asks you to do this for him so he can have the cash handy to take her to see his favorite band. With a Durable Power of Attorney (DPOA), you can transact business, access bank accounts and pay bills on your child’s behalf. A DPOA is particularly useful if you have a student studying abroad. This is a very serious document and should not be entered into lightly. Your child should choose someone he completely trusts. In addition, a successor should be chosen just in case the first person is unwilling or unable to act as POA. States vary in language used so again, make sure that the POA is acceptable in your state. As this document allows a parent to have broad powers, your young adult should be completely clear on what he is signing. For example, this document may allow a parent to access the student’s college grades! The benefits, however, are numerous and can save your child significant frustration and stress in the long run. (One side note: We do not recommend using a DPOA to take care of your children’s finances on a routine basis as he should be practicing the “adulting” skills of managing a bank account, paying bills, etc. and building confidence in his financial literacy.)
A Will is a something that many people do not want to discuss, especially if it is for your child. However, in some instances this may be highly appropriate and necessary. A Will dictates what happens to your child’s assets when he dies. This can include any property in his name or assets in a trust for which he is a beneficiary. While preparing a Will, it is important to review all trusts in which the child is named either a current or remainder beneficiary, and any powers of appointment that have been granted to him, that may be directed or exercised as a part of his estate plan. Specifically, if your child is the beneficiary of a trust and has a general power of appointment that can be exercised, these powers can be addressed in a Will. Exercising a power of appointment in a person’s Will allows him to transfer the assets of the trust to another person. Likewise, if your child has an UTMA/UGMA account, he can direct those assets in a Will as well. Not all children have assets that would require a Will but it is an important consideration.
Lastly, if you have not already done so, make sure that your 18-year-old has a valid passport. If your child has the chance to travel abroad through a college course or service program, you do not want him to miss an opportunity because he has to wait for a new passport to be processed. In addition, with increased border restrictions in recent years, even traveling to Mexico and Canada requires a passport or an enhanced license. If your child does already have a passport, check the expiration date. Many countries now also limit travel or the issuance of certain visas if the expiration is within six months.
If your child has already turned 18 or will soon, I strongly encourage you to have a HIPAA form, Health Care Proxy, Living Will, Power of Attorney, a Will (if appropriate) and a passport prepared. Some children may be focused on other (more fun) activities and not feel the urgency to get these in place, or be wary of how much control it gives parents. We recommend explaining to your child that the documents are intended to help for a limited time period. Later in life, your child will want to modify these documents as his life situation changes due to marriages, having children, and/or growing financial responsibilities. Even well-meaning and helpful parents should come off these documents as adult children reach these milestones.
While many websites will claim to let you prepare these online for little or no charge, we strongly suggest that you use these sources for information gathering only and contact an attorney to assist you. The documents are too important to risk not having them prepared with the laws applicable to your state and specific to your child. Passport applications are available at your local post office. By having these documents in place, you may save yourself and your child from future frustration and unwelcome surprises.
Disclaimer:
This presentation has been prepared by Market Street Trust Company. The views expressed herein represent opinions of Market Street and are presented for informational purposes only. They are not intended to be recommendations or investment advice and do not take into account the individual financial circumstances or objectives of the investor who receives them.
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