I am getting ready to “launch” my daughter as she heads off to college next fall. She is an adult. Although my husband and I will still support her, we no longer have any legal authority to access her financial accounts, health information, and even her grades. It does not matter that we are her parents. Our legal right to make decisions for her or obtain her information – be it financial, health or anything else – terminated when she turned 18.
All adults aged 18 and older need to have key legal documents in place. These allow another responsible adult to act on their behalf should they not be able. Your child could be traveling abroad or simply be too busy. Unfortunately, some young people experience incapacitating injuries or die.
While we hope this never happens to our children, every adult regardless of their age should have these documents in place:
- Durable financial power of attorney
In this document your child names an “agent” to act on her behalf for financial, legal or other personal matters. With such a document in place, the agent can sign checks, transfer money, file tax returns, manage student loans, and take care of other financial tasks on your child’s behalf. A financial power of attorney does not cover medical matters.
- Living will, also called a health care directive or medical power of attorney
Different states have different names for this document. In it your child names one or more people to make medical decisions on his behalf should he be unable. He should state in this document what type of medical interventions and treatments he wants and does not want. Without such a document in place, should he become severely ill, you would need to go to court to get permission to gain access to his medical information and to make decisions for your adult child. It is important your child name an agent who he trusts to carry out his wishes, not the agent’s wishes.
- HIPPA release
The Health Information Portability and Accountability Act prevents medical providers from sharing a patient’s health information, even with her parents, without the patient’s written consent. This means, unless your child has signed a HIPPA release authorizing medical practitioners to give you her health information, you won’t have access. If your child wants you to be able to receive this information, she should sign the release.
Your child may not have any assets now beyond a bank account, but he may acquire some over the next few years. A will “catches” any assets or property without named beneficiaries, and leaves instructions on to how your child wants this property to be distributed. Any assets distributed under a will go through the court probate process. To close even a single bank account with a small balance, his account would need to go through probate.
Probate costs money and takes a few, if not many, months. It is also public record. There are ways to avoid probate. When titled in certain ways, property can pass directly to your child’s chosen heir:
- Joint bank accounts
If your child has a bank account for day-to-day expenses, a parent or another trusted adult can be a joint owner on the account. This makes it easier to write checks on your child’s behalf, deposit funds, and monitor the account balance. If your child should die, the co-owner immediately owns the account. There are drawbacks to joint bank accounts. To read about these click here.
- Transferable on Death accounts and property
If your child does not want a joint owner, she can make the account TOD – transferable upon death, which names a direct beneficiary for the account. The same can be done for cars, provided your child holds the title to the car. The beneficiary needs to be named on the title. Contact your department of motor vehicles to learn how to do this.
- Mutual funds and retirement accounts
Direct beneficiaries can be named for these assets.
Have your child write down the logins and passwords for all his social media, e-mail and other digital accounts, and store the list in a safe place. He should tell a trusted person where to locate this information. Otherwise, should the accounts need to be close and he can’t do it himself, it will be a hassle to shut them down.
Access to Grades
If your child is over 18, the Family Education Rights and Privacy Act (FERPS) prevents other people, including parents, from seeing her grades. If your child wants you to have access to them, she will need to sign a waiver.
All these documents will need to be updated as your child’s situation changes: moves to another state, gets a job, acquires more assets, gets married, etc.
Preparing legal documents for an eighteen-year-old may seem extreme. If the worse should happen, however, you will be glad they are in place. I have witnessed parents become angry with disbelief when they learn they can’t just go to the bank and access their child’s account or are told by a healthcare provider they can’t have the results of their child’s doctor visit.
Have a talk with your child about these documents. Have her meet with an attorney. Remember, it isn’t just about death and serious illness. Young people are mobile. They go to school in other states, they travel, and they study abroad. Even in this day of swift electronic communication, having someone at home who can act on their behalf when a student loan agreement needs to be signed can save a lot of expense and logistical hassle.
This blog is published to provide you with general information only and is not intended to provide specific or comprehensive advice. Money Care, LLC encourages individuals to seek advice from competent professionals when appropriate.