Decorating a dorm room, rushing a fraternity or sorority, choosing a major, experiencing independence from parents, joining the workforce, taking a year off to decide what comes next – just a few things young adults can encounter after graduating from high school. Estate planning, however, is not usually on a young adult’s radar, but this is exactly when one should make sure some parts of the estate planning process are in order.
When a child turns 18, parents are no longer entitled to view their medical or financial records – even if the child is covered under the parent’s insurance and/or financially supported by his or her parents. To protect adult children if they can no longer make decisions for themselves, certain basic estate planning documents should be executed: 1) a Durable Power of Attorney for Healthcare, and a 2) Durable General Power of Attorney.
Healthcare Power of Attorney
Young adults should execute a durable power of attorney for healthcare to allow someone else to make healthcare decisions if they become unable to do so for themselves. If a young adult is in an emergency situation, a healthcare power of attorney would allow the child’s parent to communicate with and receive information from the child’s healthcare provider, and consent to the child’s treatment and service of care.
Financial Power of Attorney
A durable general power of attorney – or what is commonly called a financial power of attorney – appoints a trusted person to make financial decisions if your adult child becomes unable to do so themselves. A financial power of attorney functions much the same as a healthcare power of attorney except that it focuses on the access to financial records and bank accounts and allows the named financial agent to pay bills on behalf of the young adult should the need arise.
To protect adult children in an emergency situation, it is important to discuss these issues with them soon after they attain age 18, and ideally before they leave home for college. An added benefit of introducing young adults to these basic estate planning documents is that it gets them in the habit of seeking personal guidance from professionals such as financial advisors and attorneys and lays the groundwork for the more complex planning they will face as they continue to mature and develop.