It’s August and for parents of college-bound young adults, this often means packing the car with school supplies and ramen noodles, and of course, paying tuition. One thing that is often overlooked during this time is estate planning for your now 18-year-old. Believe it or not, your child who was a high schooler just two months ago is now an adult in the eyes of both the state and their college or university. This means that you, as the parents of a college-aged student, no longer have the right to obtain information on your child’s medical or financial information without the necessary legal documents in place. To ensure you can support your child should they require medical or financial assistance, we recommend preparing three basic documents, each of which can be created by your estate planning attorney relatively quickly and at a much lower cost than a court proceeding:
1. Health Care Proxy
Every child over age 18 should have a health care proxy to allow you to make medical decisions if your child is incapacitated, and to remain informed throughout treatment. If you are not named as a health care agent within the health care proxy, a hospital cannot legally discuss your child’s condition, let you make any health care decisions, or even confirm that your child is receiving care.
The health care proxy should include a reference to the Health Insurance Portability and Accountability Act (HIPAA) that allows you to access your child’s medical records. A properly executed health care proxy and HIPAA release will allow your child’s doctors to discuss privileged medical information with you and give you the power to make decisions regarding treatment. It also gives you the authority to contact insurance companies on his or her behalf. If your child is attending school in a different state, you should consult with your attorney to determine whether you need a separate health care proxy for each state.
2. Durable Power of Attorney
Even if you are the one paying the college tuition, you are not legally allowed to manage your child’s money or communicate with his or her financial institutions. A power of attorney permits you to access bank accounts, file tax returns, deal with student loans or other creditors, speak to the financial aid office, and handle any other financial issues that may arise. Should your child become incapacitated or simply be unavailable if attending school in another state or participating in a study abroad program, a durable power of attorney ensures financial continuity.
If an adult child is incapacitated and does not have a health care proxy or power of attorney in place, then your only recourse will be to go to court to obtain Guardianship and/or Conservatorship. This involves a public process that can be expensive and time-consuming.
3. Will
In addition to a health care proxy and durable power of attorney, some adult children may also need a will. If your child owns significant assets in his or her name, then he or she should create a will naming a personal representative to settle the estate and decide who should receive those assets. If your child does not have a will, the assets pass according to your state’s intestacy statute. Typically, that means the assets will go to the child’s parents, which may negate your own estate planning.
As a parent, you hope that you will never need to use these documents, but they are vital in an emergency, and we believe are an important part of a comprehensive estate plan.
We know that preparing these documents may initially seem daunting. Boston Financial Management’s Estate and Financial Planning team is more than happy to work with you to help craft a plan that addresses your child’s individual needs. This plan can then be shared with your attorney who can draft a simple health care proxy, durable power of attorney, and will. Please don’t hesitate to contact us at any time to discuss you or your child’s estate plan.
Alisa Kim O’Neil, JD, CTFA, AEP®, CDFA®:
[email protected] or 617-275-0313
Kathy Sablone, JD, AEP®:
[email protected] or 617-956-9712
Important
This article does not contain any legal or tax advice. You should always consult your attorney, accountant or other professional advisors before changing or implementing any tax, investment or estate planning strategy.
IRS Circular 230 Disclosure
Pursuant to IRS Regulations, we inform you that any tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding tax related penalties or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.
Professional Designation Minimum Requirements Disclosures
AEP® – Accredited Estate Planner®. Minimum requirements for the AEP® designation include active practice for a minimum of five years within the following disciplines: accounting; insurance and financial planning; law; philanthropy; and trust services with at least one-third of the individual’s time devoted to estate planning. Additionally, one or more of the following professional credentials: JD, CPA, CLU®, CFP®, CPWA®, CFA, CAP®, CSPG, CTFA, MSFS and MST is required, along with three professional references and current membership in an affiliated local estate planning council.
CDFA® – Certified Divorce Financial Analyst®. Minimum requirements for the CDFA® designation include a bachelor’s degree with three years of approved on-the job experience along with successful completion of the CDFA® examination consisting of 150 multiple choice questions. 30 hours of continuing education is required every two years.
CTFA – Certified Trust and Fiduciary Advisor. Minimum requirements for the CTFA designation include 5 years minimum experience in wealth management, a bachelor’s degree and passing the CTFA examination. 45 continuing education credits are required every three years.