Sending Your Child Off To College: Part 2: Estate Planning: Why Does Your College-Bound Child Need It?

Michael Feinfeld, Esq. on July 14, 2015

Upon turning 18 years old, children in most states are considered adults. Therefore, as their parents, you will no longer have the ability to make financial or legal healthcare decisions for them.

As they go off to college, you want to ensure that, in the event of an emergency, you’re able to access their healthcare records and have enabled yourself to care for them and make decisions on their behalf.

Indispensable Estate Planning Documents For Your Child

1. Power of Attorney

Allows an agent (such as yourself) to conduct financial and business affairs on behalf of your child. It can be designed to go into effect on the happening of a certain contingency, such as disability or incapacity (springing power of attorney).

This can be invaluable when your child is going off to college, particularly if they’re away from home, because it would allow you to step in to take care of their financial affairs – to pay their rent, to talk with their landlord, to replace a debit or a credit card, or do their banking, in the event that they cannot.

2. Healthcare Proxy

You want to appoint somebody formally to make the healthcare decisions for your child in the event that they’re not able to do so. (It must be one parent, not both, though you can have the other one act as a successor).

3. HIPAA Release

The Health Care Insurance Portability and Accountability Act of 1996 (“HIPAA”) has built-in privacy requirements for your child’s medical records and when they turn 18. You will not have access to their records when they legally become an adult. You should try to get them to sign a release to enable you to access their records.

4. A Living Will

This delineates what your child would want in the event that they should become on life support without reasonable expectation of recovery. A Living Will can help prevent a Terri Schiavo situation, where a person is on life support without a reasonable expectation of recovery and is burning through family assets.

5. A Last Will and Testament (“Will”)

The Will states how the creator/testator wants their property to be distributed upon their death and who they want appointed as the executor of their Will to manage their estate and distribute their assets. Your child should consider a Will when he or she turns 18 in case they have any assets in their own name.

6. Life Insurance

When you have a child, you should definitely consider purchasing additional life insurance to protect your family and to inject liquidity into your estate.

Additionally, you can also purchase a life insurance policy on your child (even when they’re a minor). This can have some added bonuses if the policy is a “whole life policy” because cash values that build up in whole life insurance policies tend to be cheaper when your child is a minor. Life insurance cash values can be a good way to build up savings that you don’t have to report for financial aid purposes and also it doesn’t have to be reported on your tax returns until the policy is sold or redeemed.
I recommend everyone consider having the maximum amount of life insurance they can afford in their estate plans.

This article is for general information only. It does not constitute individualized legal advice, and you should consult with a licensed attorney to determine how these general statements of the law apply to your particular circumstances.

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