Estate Planning for College Students
As back to school preparation gears up, we encourage individuals who have college-bound children to think about estate planning for their young adults. While estate planning for this age group is often overlooked, having certain medical and financial documentation in place is critical. Once children reach the age of majority (which is 18 in most states) privacy laws generally protect their medical and financial information. The following basic estate planning documents can be used to give parents, or another named individual, the authority to receive important information and to act on the student’s behalf in the event that he or she cannot do so for himself or herself.
Durable Power of Attorney. This document allows a student to name an attorney in fact to act on his or her behalf regarding financial and legal matters. For example, as attorney in fact, a parent could pay bills, maintain bank accounts, and take care of other financial matters for their child if the need arose. The power may become effective immediately or it may be “springing” – which means it only becomes effective upon the occurrence of a later event (e.g., a student’s incapacity). If the document becomes effective immediately, a parent could seamlessly act for their child, if necessary, without having to go through a determination of incapacity, which may include the added burden of obtaining a medical opinion.
Advance Directive for Healthcare. This document (i) allows a student to name an agent to make healthcare decisions for him or her in the event he or she is unable to do so and (ii) permits a student to specify certain treatment preferences regarding such care. This document only becomes effective when a student cannot (or is unwilling) to make health decisions for himself or herself.
Authorization to Disclose Protected Health Information. The Health Insurance Portability and Accountability Act (HIPAA) sets out rules and limits on who can look at and receive an individual’s medical information. This document authorizes healthcare providers to disclose a student’s medical information to certain named individuals. In the unfortunate scenario where a student experiences a medical emergency, this document would give parents, or another named individual, the authority to receive information from healthcare providers regarding the student’s healthcare status and related information.
Please note that a student may name someone other than his or her parents to serve in the above described roles (e.g., other relatives or a close friend). In addition, it may be prudent to name back-up decision makers in case the primary designated individuals are unable to act in such a role.
Last Will and Testament. In addition to the above-described documents, we also recommend that students have a simple Last Will and Testament. Even at a young age, a simple will ensures that a student can direct the ultimate disposition of his or her assets. Also, upon an individual’s death, assets must be administered and distributed, creditors must be paid, and memorial arrangements must be made. A simple will can help to make the probate process more manageable.
While parents feel that their college-age children are still very much under their care and are their responsibility, there are real-world implications associated with children getting older. Advance preparation can greatly reduce legal hurdles parents may face when trying to assist their children with medical and/or financial matters in the future. Therefore, as parents are getting their children ready to head off to college, we encourage them to think about adding basic estate planning documents to their to-do list.
Please contact MendenFreiman LLP if you have any questions.