Estate Planning for Your “Adult” Child
Defined by state law as the age of majority, the eighteenth birthday marks a significant milestone for your child. Chronologically, it is the moment when our children legally assume control over their person, their actions and decisions, and can now own property.
In practice, life for these newly anointed young adults and their parents does not change much. There is no sudden “casting out” of the former child and the days following an eighteenth birthday look pretty much like those before, for several years. In most cases, children continue to be financially dependent and reliant upon their parents while completing their education and developing their separate identities as an adult. As a result, parents often overlook the cold hard legal ramifications of that eighteenth birthday.
When an individual reaches the age of majority, and they assume legal control of and responsibility for their own “person”, there is a correlative termination of the legal control and responsibilities of the parents. The laws and regulations that apply to the operation and administration of the healthcare and business worlds, and the legal system itself, have no automatic provisions for granting parents the right to exercise any control, right, or authority that belongs, as a matter of law, solely to our children when they reach the age of majority.
For example, if your 19 year old, live-at-home college student is injured at a summer job, you might assume the hospital and workers’ compensation people will keep you fully informed regarding all the processes and the medical status of your child’s injury simply because you are the parent. Unfortunately, it does not work that way. The Federal Health Insurance Portability and Accountability Act (HIPAA) imposes strict privacy rules regarding the disclosure of an adult’s medical information to anyone else. In order to comply with that law, you would be denied any information and you would likely be infuriated.
The media regularly reports on life-changing events, from tornadoes to automobile accidents, to all sorts of recreational injuries, which cause people to lose their ability to make competent decisions regarding their person and their finances. Some of these periods of incapacity are temporary; others are permanent. Occasionally, parents are faced with even more personal medical issues for their adult children, such as the continuation or withdrawal of life-sustaining medical treatments. In either case, if your eighteen year old child is injured and unable to knowingly respond, who would sign the authorization and consent forms so that appropriate medical treatment could be put in place to begin the road to recovery as quickly as possible?
In the absence of proper planning, a family must resort to a legal process to appoint a guardian or conservator needed to address the lack of a legal representative with authority to make these serious medical, financial or legal decisions for your injured child. Unfortunately, as with any legal process, this will take time, money, and result in some level of stress for everyone involved.
The chance of such occurrences is very small; but the risks undeniably exist. Fortunately, having your new young adult child execute a few simple legal documents on or shortly after that eighteenth birthday can address these situations. An additional benefit from explaining to your young adult the importance of undertaking these estate-planning steps is that it will hopefully instill a sense of importance in that young adult for estate-planning as a life-long and living process.
The following documents, as noted in the ConnectView Applied section of the newsletter, provide a solid first step:
Durable Healthcare Power of Attorney
This document designates parents, jointly or severally, as the child’s agent for all medical matters. Note: the “Durable” nature of this Power of Attorney is necessary, and the document must expressly permit its use when the child is incapacitated. It should give the agents express authority to sign HIPAA-compliant medical information release forms.
Living Will / Advance Healthcare Directive
This important document will make known your child’s wishes with regard to implementation, continuation, and withdrawal of life-prolonging medical treatments in cases where the patient is unresponsive and has a terminal illness or injury. This will help ensure the quality of life that is important to your child and avoid having you, as parents, “guess” those wishes or having to make critical medical care decisions under stress or in emotional turmoil. Note: this is an important personal decision that should include a lot of discussion and soul-searching.
General Durable Power of Attorney
This document designates parents, jointly or severally, as the child’s agent for all personal and financial matters. Note: again, the “Durable” nature of this Power of Attorney is necessary and the document must expressly permit its use when the child is incapacitated. The document should include several expressly stated powers, such as dealing with the Social Security Administration, tax returns, making gifts, accessing safety deposit boxes, transferring property to a trust, and signing checks.
In addition to retaining executed copies in one or more readily-accessible locations, copies of the Healthcare POA and Advanced Healthcare Directive should be provided to your family physician and local hospital in advance. They will be placed into the files and records for quicker access in the event of an emergency.
If you would like more information on estate planning for your adult child, please contact your relationship manager or a member of our Wealth Planning Team at 303.531.8100.