In 2020, the end of May looked a little different than we are used to. Instead of packed commencement ceremonies and large open houses, the community found a different way to celebrate the achievements of graduating high school and college seniors. However, these seniors need estate planning just like the graduating classes before them.
It is natural that estate planning is the last thing on the minds of college kids. However, it is important that someone think about it. Parents help their children apply for scholarships, make doctor’s appointments, and prepare their taxes as their child grows up. Once a child turns eighteen and is a legal adult, it becomes more difficult for parents to help their children with these matters.
During college, I worked at the financial aid office part-time to help pay for school. Almost daily, I would speak to parents who were trying to help their children complete a form or submit information. Unfortunately, I would have to tell these parents that I was unable to speak to them because of FERPA (Family Educational Rights and Privacy Act). Since their children were legally adults, and had not executed documents that gave their parents the ability to act on their behalf, these parents were stuck. This issue can be prevented if the child executes a durable power of attorney. This allows the parents to step into the shoes of the child and take action with tasks such as managing bank accounts, preparing taxes, and submitting financial aid information.
In addition to financial matters, parents can face struggles when their child needs medical treatment. Parents must have legal documents in place in order to make medical decisions for their child if necessary, or to get information from the hospital. It is illegal for the hospital to provide information about a patient without a release or a court order. For this reason, I advise that newly minted adults should execute HIPAA releases which allow medical providers to release information to those named in the documents. I also advise that college students and young adults have medical durable powers of attorney executed. This allows someone to make medical decisions for them when they are unable to.
These documents are also necessary for college graduates starting new jobs or moving to new locations. While these graduates may be independent, it is still necessary to have a plan in place in case the graduate becomes unable to manage their finances or make health care decisions, particularly if they are moving to a new city or state where they do not have relatives or friends. As these graduates start their new jobs and lives, it is also important to have a plan that works when they begin to accumulate assets. For those with student loans, it is important to have accurate information about which loans are forgiven by death and which are not. Review how assets (such as bank accounts) are titled, and who the beneficiaries of these assets are. Don’t make the mistake of leaving an ex-boyfriend as a beneficiary of your bank account when that relationship is over. An estate plan can be drafted to ensure the assets you have worked for are handled appropriately.
We raise our children in the hope that they will become independent adults, but as they take bigger steps into the adult world, it is important to know that you can assist them if an unforeseen accident arises.
Congratulations to the Class of 2020 from everyone at the Morrison Law Firm!