10 Aug Estate Planning for College Students. And Their Parents Too.
Congratulations are in order for all of you parents of college students, who raised a child from a seedling to a blossoming adult. It’s time to celebrate. But somewhere in between the graduation parties, the dorm room shopping trips, and orientation, there are some critical legal tasks that both you and your kids should consider addressing. While estate planning for college students may sound completely unnecessary, there are a couple of critically important steps your child should consider taking to get their own estate plan in place before shipping off.
Yes, you read that correctly. I did say the children should establish their estate plan just like their parents. Perhaps your child does not own enough property to make having a will seem critical, but having durable financial and medical powers of attorney in place so that you can speak on your child’s behalf during an emergency is critical.
Why would someone with no assets or income need an estate plan?
The reason for such a need is because, legally speaking, that child of yours is no longer a child. The age of majority in the United States for making one’s own medical decisions is 18. For “new” adults, college represents, for many, the first time they will be without direct parental supervision. Therefore, just like any adult, they need to have legally enforceable instructions in place about who they authorize to handle their medical decisions and finances for them if they cannot, not just in the event of death, but also in the event of hospitalization. While it is typically beyond the need for a child entering the age of majority to be concerned with or genuinely have a need to also put together a trust, it should always be considered depending on assets available to them now and in the future.
Let us consider a real world example of why having an estate plan for a “new” adult is in the best interest of them, and their family. As an example, what if after their 18th birthday, on their way to work or school they are involved in an accident. Who has the ability to answer medical questions, request information from hospital staff, and access financial accounts to keep paying bills in case they are incapable of doing so for themselves?
Will the hospital even take your call?
The answer may shock you: no, the hospital may not even be willing to confirm whether your child is there unless your child has authorized you to speak for them as their agent with a validly executed power of attorney for their medical and financial responsibilities. Banks will not allow you access to their accounts, even if you still have the same address as your kid, unless you have a power of attorney authorizing you to do so. Even if your child names you as his or her emergency contact with the school, what if he or she gets taken to an off campus facility for emergency treatment?
A scary thought to think that the difference between being there entirely for your child one day and completely gone the next, just because of a birthday. To alleviate this concern and to ensure that this example above does not play out for you or your loved ones, you and your young adult need to establish a realistic estate plan.
What about your estate plan?
Additionally, with all the changes occurring to their new life as the parents of a young adult and all the new responsibilities and concerns they are addressing, parents should also consider whether it is time to amend their own wills, trusts, powers of attorney, durable powers of attorney, and any beneficiary changes to life insurance, pension plans or IRAs. Perhaps the last time you looked at your estate plan, your primary concern was ensuring that your child would have the right guardian if something happened to you. While that concern is now off the table, you need to be concerned about whether your child could handle administering or receiving your estate if something happened to you. The statistics about how people tend to handle unexpected windfalls indicates that they probably couldn’t.
Call The McKenzie Law Firm with any questions about preparing both your child and yourself for this new chapter in your lives. We can help both you and your child get the right documentation in place to ensure that you both are protected in the event of the unexpected.
(Thank you to our 2019 summer law clerk, Douglas Gasca, for his substantial contributions to this post.)