- Posted on: Aug 10 2021
There are many considerations when planning the transition from high school graduate to college student, and an estate plan for a young adult should be included in this. A well-drafted estate plan will help put parents’ minds at ease as they send their child away to college and can help reduce parental stress in what is already a very stressful but exciting time. While easy to overlook, neglecting this could ultimately be very detrimental. The team of attorneys at Dunlap Bennett & Ludwig are experienced in providing estate planning documents that fit each individual’s specific needs.
An estate plan for a young adult, especially a new high school graduate, may seem a bit counterintuitive because the student is not in the workforce full time and actively acquiring assets. It is important to keep in mind that estate planning is not only about the disposition of your property when you pass away. It is broader than that and encompasses management and decision-making regarding your person and assets while still alive but unable to make decisions for yourself. Once your child turns 18 years old, he or she is legally entitled to manage their own affairs. That means even though, as their parent, previously you could easily access medical, financial, and educational information regarding your child and act on their behalf, your ability to do so now is severely diminished.
All Too Common Scenario:
It is freshman year for your son or daughter, who is currently taking classes at a university several hours away from you. One night, you receive information that they have suffered a medical emergency and have been admitted to the emergency room. Frantically, you call the hospital and inquire about their current condition and the facts and circumstances that led up to it. Rather than reassure you about the situation by briefing you about what happened, they tell you they cannot release that information and refuse to talk to you! You ask if you can go down there right now to visit them and make sure everything is okay, and they tell you they will turn you away if you try to show up at the hospital as well!
This scenario, in and of itself, should be enough to cause both their parents and their college-aged children to plan ahead of time. But if the adult child is incapacitated in the hospital for a significant period of time, the situation could be even worse. They may have rent that is due or other bills, and now you cannot even access their bank accounts. You may also have to petition the court to be granted the right to manage either their finances or personal care. This would entail a legal proceeding with court hearings, guardian ad litems being appointed, etc. It is important to have estate planning documents; the team of attorneys at Dunlap Bennett & Ludwig is ready to answer any questions you may have.
The Health Insurance Portability and Accountability Act of 1996 protects personally identifiable health information about an individual, such as their physical and mental health, treatment received, payments for care made, etc. Hospitals and health care providers cannot legally disclose this information to others without the permission and consent of the patient. By signing a HIPAA waiver, a college-aged young adult can ensure their parents are not kept in the dark about their health condition in case of a medical or health emergency.
Advanced Medical Directive
An advanced medical directive acts as your power of attorney for health care decisions if you are incapacitated and unable to make your own health care decisions. Among other things, your agent is authorized to consent to or withdraw treatment, employ and discharge health care providers, and admit or discharge you from the hospital. This document also typically includes a “living will,” which directs how and when you want life support withdrawn if you have a terminal illness with no reasonable chance of recovery.
Financial Power of Attorney
This document allows your agent or “attorney-in-fact” to access your financial assets and manage them on your behalf. For a college-aged individual, this will probably only be checking or savings accounts at their bank and perhaps their vehicle. However, this document also generally covers other types of assets as well such as land and real property, business interests, retirement accounts, investments, valuable tangible personal property, etc. With a validly executed financial power of attorney, the parents of the college-aged young adult will be able to manage the finances, file taxes, and control the personal property of their adult child in an emergency.
Other Documents to Consider:
Last Will and Testament
The primary function of a last will and testament is to dispose of your property when you pass away. Because most college students will have minimal assets, designating beneficiaries on their bank accounts may be sufficient since assets that have designated beneficiaries pass by operation of law and are not subject to wills and probate. However, the college-aged young adult may have tangible personal property (such as jewelry, collection items, etc.) they want to leave to specific people, like parents, siblings, friends, cousins, etc. A last will and testament would be very useful in this situation. Since pets are considered personal property, a college student with a pet may also want to designate whom they want to leave their dog, cat, pet fish, etc. to. The college-aged young adult may also want a last will completed now, so they are set for when they graduate college.
The Family Educational Rights and Privacy Act limits how and when institutions of higher education can release educational records of enrolled students. This document is not as essential as the previously mentioned documents, but the college-aged young adult may desire to allow his or her parents to view and access their educational records such as academic transcript, current class schedule, etc., either in case of an emergency situation or due to a private family agreement. If your child signs a FERPA waiver, you will have to request the information since it will not be sent automatically.
It is important to remember that for any of these documents, your college-aged adult child, not you as the parent, is the person who ultimately decides which powers he or she wants to grant to others if any. If you have a young adult child without an estate plan in place, you should schedule them for a consultation so a licensed attorney can walk them through the legal consequences of the documents and allow them to make a well-informed decision.
To learn more about estate planning, visit our Trusts and Estates: Tax and Wealth Planning, Administration, and Probate page.
To learn more about estate planning, click here, or contact our Estate Planning partner lead below:
Rhonda A. Miller is a partner at Dunlap Bennett & Ludwig. Ms. Miller runs Dunlap Bennett & Ludwig’s national estate planning department. She concentrates on sophisticated estate planning, including special needs trusts, asset protection trusts, spousal lifetime access trusts, charitable remainder trust, qualified small business trusts, and other trusts used to minimize or eliminate capital gains and estate tax. In addition, she focuses on administering large and complex estates including litigation. Ms. Miller is a highly sought-after public speaker.
She teaches continuing legal education and is a continuing education sponsor for the Certified Financial Planner Board and insurance agents. She was named Best Attorney by the Wall Street Journal and won Top 50 Women Lawyers in Virginia. Ms. Miller is a member of the bars of the Commonwealth of Virginia, the District of Columbia, and the State of California. She earned her B.A. degree (with honors) from PA State University and her J.D. degree, with honors, from Loyola Law School in LA.
To learn how Ms. Miller can assist with your legal needs, click here.
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Posted in: Estate Planning