Essential Estate Planning for 18-Year-Olds

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estate planning for young adults college

By Matthew Camrud, CFP®

After years of raising, loving, and caring for your child, the time has come. You sit expectantly in an auditorium full of parents and relatives, waiting for your child to cross the stage and capture her high school diploma. She shakes the principal’s hand, looks out into the audience, and locks eyes with you for a brief moment, as if to say, ‘Thanks, Mom and Dad.’ You beam with pride as tears of joy and reflection stream down your face. The child who once curled up in your lap while you quietly read bedtime stories is now a young adult, heading off to college in a few short months.

With all of the emotions and excitement during this time of transition, the last thing parents are likely thinking about is estate planning for young adults. But in order to ensure that parents have the ability to care for their children in the event of an accident or sudden health issue, there are two important documents that every 18-year-old should have.

Medical Power of Attorney

A medical power of attorney designates someone to act as their health care proxy if the individual is unable to make health care decisions for themselves. Parents might say, “Well, I’m paying my son’s tuition, claiming him on my tax return, and he’s even on my health insurance policy—I don’t need to be designated as his power of attorney for medical decisions.” Unfortunately, this is oftentimes not true. In a health care emergency where a child becomes incapacitated, even temporarily, there have been many instances where court approval is required for parents to act on behalf of their child. In the midst of an emergent situation, this is the last thing an anxious parent wants to deal with.

And the risk is real. Accidents are the leading cause of death for young adults, with a quarter-million Americans between the ages of 18 and 25 being hospitalized with nonlethal injuries each year.

There have been many instances where court approval is required for parents to act on behalf of their child.

Thankfully the document is simple to prepare. You can work with an estate planning attorney, or visit sites like caringinfo.org, which provides up-to-date versions of the forms for each state. Downloads are free.

Financial Power of Attorney

As with the medical power of attorney, a financial power of attorney designates someone to make financial decisions if the individual is unable to do so themselves. In a situation where an adult child is temporarily disabled, the designated agent can pay their bills and assist with a variety of financial and legal matters that might arise. These forms vary by state as well and can be easily be found by searching for “Free (name of your state) financial power of attorney form.”

As the saying goes, if you want to be assured of sunny skies, bring an umbrella. As parents, we hope our children will go through life without being hurt or experiencing pain, and it’s difficult to think of them in a position where they cannot act for themselves. By helping your adult children get these documents in place, you can get back to focusing on their continued development and the unconditional love you have for them. And when they cross the stage to accept their college diploma and look into the audience to find you, you can once again lock eyes, beam with pride, and celebrate their life as it continues to blossom.

Matthew Camrud, CFP® serves as an advisor at Brighton Jones.

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