Why These 3 Documents Are More Important Than Ever Before!
In the last few months, I have been meeting with more and more clients with kids or grandkids that just graduated high school, I have been thinking more and more about the importance of estate planning for these new, young adults.
When most people think of estate planning, they often think it’s something that should be done when you’re a little bit older - - when you’ve got a house, you’re married with a family, and as you age and need to begin thinking about the “what ifs” of life. Or perhaps it’s something that you need to think about because you have become ill or disabled and you want to ensure the proper management, distribution and preservation of your estate.
One often overlooked need for estate planning is when your child (or grandchild) becomes an adult. When someone becomes a legal adult at the age of 18, this is when parents will lose certain rights they once had before while the child was a minor. As an adult, they have the legal rights to govern their own life, which means that you, as a parent, lose your access to your child’s financial, educational and medical information.
This wouldn’t be something to be concerned about; however, with the current COVID-19 pandemic posing risks of getting sick and ending up in the hospital, estate planning for your adult child is more important than ever! While most college-aged kids may not need a full estate plan, such as a Will or Living Trust, there are three very important estate planning documents that we recommend every legal adult have in place.
- HIPAA Release. When your child turns 18, his or her healthcare records are now legally kept between the child and his or her healthcare provider. The Health Insurance Portability and Accountability Act, otherwise known as “HIPAA”, was a law set up to protect peoples’ privacy. However, this law (as well as a unique law in California known as the Confidentiality of Medical Information Act, or “CMIA”) has had some unintended consequences as well, by shutting out loved ones in times of crisis. For example, if your child is off at college and is in an accident or contracts COVID and is rushed to a hospital, you may be prevented from receiving critical information about what happened, including even being notified that your child was admitted to a medical facility! Medical professionals are prohibited from speaking with you about the condition of your adult child and you will not be able to make any medical decisions for your child in situations where your child is unable to communicate and make any decisions for him or herself.
- Healthcare Directive. A Healthcare Directive is a legal document will allow your child to designate you (or another trusted individual) to be able to speak with medical professionals and make medical decisions on his or her behalf, if he or she is unable to do so. Having this and the HIPAA Release in place for your adult child will allow you to quickly ensure that your child is properly taken care of during a time of crisis, while also avoiding the unnecessary hassle of court proceedings and the legal costs to establish a Conservatorship to help your child.
- Durable Power of Attorney. Like one’s medical information, once someone turns 18, their finances become private as well. Again, in the event that something happens to your child, you might be needed to access his or her bank accounts and credit cards and will not be able to do so unless you have what is known as a Durable Power of Attorney put in place that appoints you (or another trusted individual) to do this. Some people choose to open joint accounts with their child. While this would avoid any issues with having access to the accounts, it is not recommended since it could have unintended consequences, such as applying for financial aid, creditor claims, taxes and more!
The hope is that these legal documents are never needed. But, unfortunately, we are not able to control or predict what could happen and with everything going on, isn’t it better to have these simple estate planning documents in place for your adult child than not - - whether he or she is going away for college or not!
If you or someone you know has an adult child that may need these critical estate planning documents, please contact our office.