Our firm recently hosted an evening seminar on long term care and estate planning. After having introduced the speaker, Anton Dworak J.D., LLM (Lyons Gaddis Kahn Hall Jeffers Dworak & Grant, PC) I was sitting in the audience casually listening to his presentation. I expected to only hear familiar facts. I am, after all, a financial planner! Figure my embarrassment when he mentioned the need for clients to have certain legal documents drafted for their 18+-year-olds. Not only had I not brought this up with my clients, I did not have these in place for my 18-year old son! Needless to say, I remedied that situation that same week.
As a matter of fact, there are four estate planning documents, more commonly associated with older people, that are essential for younger people too. Without them parents in most states, including Colorado, don’t have the authority to make health care decisions or manage money for their kids once they turn 18. It will not matter that they are paying the tuition, still have those kids on their health insurance plans and claim them as dependents on their tax returns. If a young adult is in an accident and becomes (temporarily) disabled, a parent might need court approval to act on his or her behalf. To avoid this, you will need:
- Durable Power of Attorney. This form grants parents the authority to sign documents for their child. It also entitles them to handle mundane tasks such as renewing the child’s car registration while they’re at college out of state, managing financial accounts held in their name or filing a tax return on their behalf. This can be particularly helpful if students go abroad for a semester.
- Medical Power of Attorney aka health proxy. This document gives you authority to make medical decisions on your child’s behalf in the event she’s unable to.
- HIPAA Authorization. Due to the Privacy Rule of the Health Insurance Portability and Accountability Act (HIPAA), many providers will not disclose a young person’s medical condition to his/her parents without a HIPAA authorization in place. This can be a separate document, but is usually part of the medical POA.
- Advance Care Directive, aka living will. Young people should have one of these as well. An advance care directive outlines a person’s wishes about life-extending medical treatment, as well as other intentions, such as organ donations. This form can avoid additional emotional stress in an already difficult situation of a medical emergency.
It is important to know that these legal documents can be as broad or as narrow as you and your child agree and can be revoked at any time, and that parents must honor the young adult’s wishes.
As you discuss the benefits of being able to help your son or daughter out of a jam, keep in mind they have a right to privacy. It is all about finding the right balance between their blossoming independence and your desire and ability to be helpful when needed.