As a parent of a student, you figured out how everything would fit in the car, bought a dorm refrigerator, and made sure your youngster has all of their clothes and linens. They are now ready for college. Where are they?
Have you thought about the implications that once your child turns 18, he is a legal adult in most states? The age of majority is adulthood as recognized by law, when the parents (or guardians) of a minor cease to have legal responsibilities for their well-being. Your child’s finances and health are their own decision.
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Whether your young adult is heading off to college, taking a gap year, or entering the workforce, now is the time for you to tackle the inevitable: they are growing up.
They need, at least, a Health Care Power of Attorney (HCPA), if not a financial power of attorney, as part of their adult life. Viewing this as a learning opportunity is a way to relieve the pressure on parent and child during the conversation.
Since the passage of the Health Insurance Portability and Accountability Act (HIPPA) in 1996, everything from confidentiality of medical records to academic records has been restricted, although as a parent you may be the financial support of a child. It’s a far cry from your own college years.
If an adult child is injured and unable to make medical decisions, who will intervene? The parents, in-laws and the partner of the young adult are candidates. But who would be they or they want to? That is why they need a health care power of attorney to avoid stress and family disagreements.
A health care power of attorney is a legal document that allows another person to make medical decisions about their care if they are unable to do so on their own. This important necessity appeared after the Terri Schiavo affair in the early 2000s. At the time, a spouse’s medical decisions were contested by his parents. She had not left any formal instructions or health care documents, which made this case long and trying. She was 26 when she fell into a coma.
About 17% of young adults end up in the emergency room each year, according to a 2016 CDC study, the latest year for which information is available. (Fortunately, the vast majority of cases are not life threatening.)
Although an HCPA is easy to set up, states have different rules and forms. Be sure to follow the directions for your condition. You can learn more from your lawyer or the American Bar Association.
As for a financial power of attorney, most 18-year-old adults have very little property. Their name may not even be on a car. Your bank accounts may be linked, so financially they may not need a power of attorney. For convenience, doing this at the same time as the HCPA may be a good idea.
Most likely, you have discussed banking with your child. They have a checking account and a debit card. You may have even provided them with a credit card for emergencies. (You’ve defined emergencies in writing, haven’t you?) So that’s one more conversation you need to have with them.
I know a lawyer whose son was going to college. She therefore drafted a health and financial power of attorney in July. In August, his son was practicing his independence and still had not signed it. She explained that the documents were only intended for emergencies. Then she said to him: In two weeks, you will need a ride to the university and money to pay the tuition. I will provide this as we have planned. But you have to sign this document. He signed.
In the ideal world, your estate planning attorney – you have your documents in order, don’t you? – would offer the documents for each of your children as part of the package when you have completed yours. Usually the only time this is highlighted is for children with special needs who are 18, not for those who go out into the world alone after high school.
Despite the range of websites and Facebook pages offering support and lists of what to offer students as they go to college, none mention these important legal documents.
Showing your child that you take their transition to adulthood seriously can open up a whole host of conversations and mature behavior on their part. At least we can hope. Plus, it’s something they can leave at home, and you can hope they never use it. So make it happen for peace of mind.
CD Moriarty is a Certified Financial Planner, MarketWatch Columnist and Personal Finance Speaker. She blogs at MoneyPeace.