2016 is a big year for 18-year-olds. Many will be voting in their first presidential election. Some will be headed off to college, while others may be looking for a full-time job and moving out on their own. Turning 18 is a big deal. In most states, it’s the age of majority. But it’s also the age at which young people become responsible for their own medical and financial records. And that’s why – even at the tender young age of 18 – kids need a basic estate plan.
Here’s a hypothetical situation to illustrate my point: John and June just sent their son, Tom, off to college at Michigan State this year. Tom and some friends decided to carpool home for the weekend, but on the way, they got into a terrible car accident. The accident left Tom unconscious and in the hospital. Distraught, John and June called the hospital to try to learn about their son’s condition, but because Tom was an adult, the hospital refused to release information about his status. When they arrived at the hospital, John and June couldn’t even speak with Tom’s doctor. They had to wait until Tom regained consciousness and gave his doctors permission to release his medical information to his parents.
You can imagine the heartache and frustration a parent might feel in this situation, not to mention confusion! Most parents assume that if a child still lives at home, or if they are paying to send that child to college, they still have the right to make decisions on their child’s behalf. In Michigan, however, the law considers a person to be an adult when he or she turns 18, with a legal right to privacy and the ability to govern his or her own affairs.
With a simple estate plan, Tom’s situation could have played out much differently. At a basic level, his plan should have included:
- A Health Insurance Portability and Accountability Act (HIPAA) release. A signed HIPAA release could have enabled doctors to release information about Tom’s medical condition to his parents.
- A health-care proxy. If Tom had a health-care proxy in place, and had named his parents as his agent, they would have been able to make health-care decisions on his behalf when he was unable to make those decisions on his own.
- Financial power of attorney. If Tom had remained unconscious for months, and had given financial power of attorney to his parents, John and June would have been able to access Tom’s bank accounts, pay his bills, or speak to his landlord about his apartment lease.
Beyond the basics, and perhaps as Tom gets older, he could consider keeping a list of all of his social media accounts and subscriptions (including log-in information), and naming a trusted individual to manage or terminate those accounts in the event of his death. In addition, Tom might consider creating a basic will, or purchasing a life insurance policy that would cover his burial expenses. He should also think about identifying beneficiaries for his bank accounts or his 401(k) when he gets his first job. And he should revisit his estate plan regularly, because, as we know, a young person’s situation can change frequently.
At AMDG Financial, we often help clients establish estate plans, and we encourage parents of teenagers to help their children create basic plans of their own. It’s never too soon to teach children – or young adults – to become good stewards. Have you had this conversation with your children yet?