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Estate Planning for Your College-Bound Child

Note: Today I welcome another guest blog post, this time from Sara N. Tasch. She is a local estate planning attorney who opened my eyes to the fact that parents aren't the only ones who need an estate plan in place. 

Sara received her law degree from Thomas Jefferson School of Law and also has a Bachelor's in Political Science and Economics. She has over ten years experience in estate planning for families - helping them protect their assets using estate, business, and tax planning techniques. Sara is the founder of Tasch Law Firm and currently Of Counsel at The Estate Planning and Legacy Law Center in CarlsbadWhen not working as a lawyer, she enjoys snowboarding, hiking, volunteering, and spending time with her husband, young son, and their two rescue pit bull terriers, Piglet and Tyson. 

The registration paperwork is filled out, the tuition is paid, and your kiddo is about to embark on the next big chapter in their lives:  College. 

One thing you probably didn’t consider among all this hustle and bustle is how you would manage their finances or make healthcare decisions for them in the event they are unable to do those things for themselves.

As an estate planning attorney, this is a topic that comes up often, and one that I’ve come to realize isn’t top-of-mind for most parents.  But the fact of the matter is simple:  once your kiddo turns 18, he or she is an adult in the eyes of the law. Likewise, your ability to manage their bank accounts or talk to their physician is now terminated, which can be problematic in the event of an emergency.

Several years ago, I had a client who unfortunately learned this lesson the hard way.

Shortly after his 18-year-old daughter, Sophia, started college in Boston, he received a call from her roommate.  My client, an airline pilot, was away from his phone when Sophia’s roommate called, and upon landing received a voicemail message indicating that his daughter was in the hospital.  The roommate neglected to leave much more information than that – neither what was wrong with Sophia, or even the hospital she was at.  The roommate simply left her phone number, which my client attempted to reach her on for hours to no avail.  A complete wreck at this point, my client began calling every hospital in and around Boston.  But Sophia was 18 years old – an adult – so unless my client had the appropriate documents in place that gave him access to his daughter’s medical records, HIPAA laws prevented the hospitals from disclosing any information to him about Sophia.  In fact, they could not even tell my client if his daughter was there.

This particular story has a relatively humorous ending: Sophia was hospitalized for an allergic reaction she experienced after being bitten by fire-ants.  But as a parent, this is a terrifying scenario to even imagine.  What if it was worse?  Not to mention, being thousands of miles away, the helplessness a parent must feel in that situation is heart-wrenching.

The good news is:  there’s a pretty easy fix, and it just involves a little advance preparation.

By executing an “Incapacity Plan,” your now-adult child has granted you the ability to act on their behalf should they ever become incapacitated or otherwise unable to act on their own.  The Incapacity Plan is comprised of essentially three different powers of attorney.

#1 - Durable Power of Attorney

This is the document where your child grants you, as his or her “agent,” the authority to manage their financial affairs for them.  It is referred to as “durable” because the authority granted to the agent springs into existence after an incapacity event (such as a car accident) occurs.  Alternatively, a Durable Power of Attorney can be made immediate, which means you, as the agent, can begin acting on your child’s behalf right after the document is signed, regardless of whether they are incapacitated.  This is handy as most 18-year olds actually want mom or dad’s help in managing their financial affairs - namely, they’re pretty excited about you making transfers into their bank accounts or taking care of their credit card payments for them.

#2 - Advance Healthcare Directive

This is the document in which your child will specifically name the person(s) he or she would like to make medical decisions for them should they be unable to make such decisions themselves.  This document, also commonly known as a “living will,” also lays out your child’s wishes with regard to life support and organ donation, should something catastrophic occur.  Thinking about these things is truly horrifying, but the only thing I imagine would be worse is being in the situation and not knowing what your child would want you to do.

#3 - HIPAA Waiver

This is the document my client in the story above needed, but unfortunately did not have.  A HIPAA waiver simply names the person or people your child authorizes to access his or her medical records.  The HIPAA Waiver my firm provides is comprehensive and drafted to comply with federal law.  Or, to put another way, it’s will be accepted by any doctor and any hospital in the United States.  It’s a good document to have on hand if an emergency arises.  Had my client had this document, he could have simply faxed or emailed it to the Boston-area hospitals, and he would have pretty quickly found out Sophia was going to be A-okay.

The moral of the story is this: when your child turns 18, your access to their financial and medical information terminates, and unless you have the appropriate documents in place that grant you the authority to help them manage these things, your hands will be tied.  Preparing in advance will make all the difference.

Just consider this one more thing to take care of before your kiddo leaves the nest!

Update: You have options when putting these documents in place. There are ways to DIY it, but there are also pitfalls to that route. An estate planning attorney can make sure your bases are covered for an affordable price (less than $500). Talk to a couple and discuss pricing and multiple-child discounts!