College age children and estate plans: What you need to know.

The school year recently began across the country. No matter the age of the child, whether five or 18, parents take steps to help make sure their children are ready for the new school year. One important step that parents of college age children may not think of: estate planning.

The importance of estate planning for young adults was recently discussed in a Wall Street Journal article. The article offered a variety of suggestions, and noted that many college age children may not take an estate planning conversation seriously. These young adults may point to the fact that they have few, if any, assets to cause concern. Although this may be true, distribution of assets is only one part of an estate plan. An additional component involves incapacitation and medical decisions.

Children over the age of 18 are considered adults in the eyes of the law. As a result, many medical facilities will not allow parents to be involved in medical decisions if their child is injured and unable to communicate.

Estate planning documents important for every young adult

The following documents are important for all children that reach the age of 18. Even parents of those that remain at home after turning 18 can have difficulties being involved in making legal decisions if their child becomes incapacitated. This can impact not only medical decisions, but financial ones as well. If a child is unable to pay rent or other bills, a parent may not be able to access the child's accounts to make these payments unless certain steps are taken.

To help avoid these issues, every young adult should have:

  • A basic will. A will helps ensure the assets a young adult does have go where he or she would like them to go. Without this document in place, assets will pass based on state law. This generally results in asset going to parents or other living family members.
  • Living will. Also known as a healthcare directive, this document explains medical treatment preferences. It could include guidelines instructing medical professionals to use all medical techniques available to sustain life in the case of an emergency or explain which procedures the author would prefer to avoid, like artificial life support.
  • Durable powers of attorney. When put in place for healthcare, this document allows the named person to make medical decisions. A similar document can also be used to grant a third party with the power to make financial decisions.
  • HIPPA release. HIPPA, or the Health Insurance Portability and Accountability Act of 1996, affords patients a great deal of privacy. Although generally valuable, these privacies can cause obstacles to parents attempting to help their incapacitated children. A release can remove this obstacle.

Becoming involved in medical decisions if these steps are not taken can be very difficult. In some instances, a lawsuit requesting the court place the parent as a temporary legal guardian may be necessary. In addition to being costly, these proceedings can take away the time and resources a parent would prefer to use towards helping the child get well.

Determining which documents are best can vary for each situation. Contact an experienced estate and tax planning lawyer to discuss your situation and better ensure a successful estate plan is put together that will meet your needs.