You may not feel like your child is fully grown when he or she leaves for college, but at age 18, your student is considered a legal adult. This means that, unless you complete some estate planning steps, you’ll no longer have the legal authority to remain informed about his or her medical records or financial assets.
Why does this matter? Consider the following situation.
Your 18-year-old daughter, attending college out of state, is involved in a car accident. Her roommate calls you to let you know she’s in the hospital. You frantically call the hospital, asking for an update on her medical condition. Instead of reassuring you that she only suffered minor injuries, the hospital worker states they unfortunately cannot release any confidential medical information. You ask if you can make the drive to visit her and are told you’ll be turned away upon arrival at the hospital.
You also learn that if your daughter becomes incapacitated for a period of time, you won’t have access to her financial accounts to pay any of her living expenses, such as rent or utility bills.
Without certain legal documents in place, you’ll likely need to petition the court for the right to manage your daughter’s medical care and handle her financial matters. This situation only adds to the anxiety and frustration of an already stressful circumstance.
Fortunately, an estate planning attorney can help you draft several documents that can prevent you from experiencing such a scenario. Three essential documents are as follows:
• HIPAA waiver — According to the provisions of the Health Insurance Portability and Accountability Act of 1996, hospital and healthcare providers can’t legally disclose an individual’s medical information to others without the patient’s consent. By signing a HIPAA waiver, your child can ensure you have access to his or her medical information in the event of an emergency.
• Advanced medical directive — This document functions as a healthcare power of attorney, allowing you to make medical decisions for your child should he or she become incapacitated. This document also typically includes a living will, which specifies how your child would like you to handle end-of-life decisions.
• Financial power of attorney — A financial power of attorney allows your child to designate you as an agent to manage his or her financial assets. With this document in place, you’ll be able to manage your child’s finances, including paying bills and filing taxes on their behalf.
In addition to the three essential documents noted above, you may also want to consider executing the following:
• Financial Educational Rights and Privacy Act (FERPA) waiver — This allows you to have access to your child’s education records, such as transcripts, class schedules, etc.
• Last will and testament — While college students typically have few assets (no home or car in their name, etc.), your child may want to designate who would receive important items, such as jewelry, collectibles, or pets, if they were to pass away. It can make sense to execute a will at the same time as the documents above so that your family is better prepared once your child graduates from college.
Gene Gard, CFA, CFP, CFT-I, is a Partner and Private Wealth Manager with Creative Planning. Creative Planning is one of the nation’s largest Registered Investment Advisory firms providing comprehensive wealth management services to ensure all elements of a client’s financial life are working together, including investments, taxes, estate planning, and risk management. For more information or to request a free, no-obligation consultation, visit CreativePlanning.com.
