Planning Ahead: The Importance of Basic Estate Planning for 18-Year-Old Adults
At age 18, your son or daughter is legally an adult, and you no longer have the “legal” authority to make educational, health or financial decisions for them, nor will you be allowed to substitute your preferences over theirs during a life emergency. As parents, it is vitally important for you to educate and assist your children in executing these documents. Failure to do so in a timely fashion can be costly and disruptive to their lives and yours.
Durable Power of Attorney:
A Durable Power of Attorney authorizes you to manage legal and financial matters such as paying tuition, applying for student loans, managing financial accounts, and collecting government benefits on your child’s behalf to name a few. If and when a crisis occurs with your child (and it often does), and you do not have the legal authorization required to act on his or her behalf, you may be left with no alternative but to seek the services of an attorney, or to petition the court “pro se” for authority to act.
Healthcare Power of Attorney:
A Healthcare Power of Attorney allows your adult child to name you or another person as Health Care Surrogate. Should your child become incapacitated or otherwise loses the ability to make medical decisions, the designated Surrogate is empowered through this document to make those decisions. Experience has taught us that this is the most important document a young adult can have in a basic estate plan simply because life happens and so do accidents. Once again, without this document authorizing you or another named surrogate to act on behalf of your adult child, you may have to seek authorization from the court before you can consent to medical care on his or her behalf.
Last Will & Testament:
Testate means to have died with a valid Last Will & Testament (“a Will”). Intestate means to have died without a Will. Each state has what is called “Intestacy Laws” that dictate how, and to whom property is to be distributed when someone dies without a Will, the consequences of which can be jarring. Do not fail to educate your young adults about the importance of having a Will to protect the assets they intend for their loved ones, especially if they are the parents of infants and toddlers. Because of the uncertainty of our time, most persons only get one chance to do it right. Our advice: Do it right; do it now.
When reality kicks in!!
Jamie’s eighteenth birthday and graduation party ended on a high note. Earlier that day, he was notified by Stanford University of his acceptance into the School of Engineering’s Aeronautics and Astronautics program. Great excitement filled the air as their only son, their precious baby boy had graduated not only at the top of his class but was the recipient of a four-year scholarship to the college of his choice.
Rick and Rita went on a shopping spree that lasted several days. The list included all the personal items and electronic devices imaginable that Jamie might need over the next four years and concluded with visits to the family doctor and their bank. While processing the documents for Jamie’s new bank account, the friendly teller inquired whether his parents had provided him with an estate plan and financial counseling. The couple was taken aback but kindly replied that they had everything under control. On the way home, Rita admitted that she was unsettled by the teller’s inquiries and Rick agreed. They had done very well raising their son so far and were not interested in anyone’s ideas.
One day during a trip to Italy, they received a call from the university notifying that Jamie had been in a car accident and was hospitalized. Except for the name of the hospital, they provided no additional information to Jamie’s parents. Rick and Rita immediately called the hospital, but no one would provide details on Jamie’s condition unless they had written consent to act on his behalf. Rita called the university and requested information from Jamie’s file. Her request was denied on the grounds that Jamie was an adult, therefore no information would be released without his written consent. “This is insane” Rick and Rita thought. The final straw came when they asked the bank to accept a wire transfer into Jamie’s bank account; they were advised to consult with an attorney.
QUESTIONS
How would you advise Jamie’s parents?
Are there any options available to them to act on behalf of their son ?
Could this problem have been avoided, and if so, how?
