Paying for college, moving out, getting a job, and building plans for the future are just some of the exciting things an 18-year-old usually has on their mind after graduating high school. Unsurprisingly, writing a will or creating an estate plan is probably the last thing they’re thinking about.
And why would they? Not many 18-year-olds have much to leave as far as an inheritance is concerned, and the idea of creating a will seems like something to do later, when they’re more established in their adult lives.
In actuality, there are multiple reasons why a will and other estate documents should definitely be on your graduate’s to-do list, even if everything they own can fit into one suitcase.
Six reasons your adult child needs an estate plan
1. Medical Power of Attorney
The day your child turns 18, he or she legally becomes an adult, and that means they must designate someone to make medical decisions for them if they become unable to do it for themselves. This is even more crucial if your child is going out of state for college and potentially a plane-ride or hours-long car ride away.
If your child becomes incapacitated, doctors will provide emergency, life-saving care, but parents cannot make medical decisions, access medical records, or speak with doctors without a lengthy court intervention process. In the worst cases, the court will designate a guardianship or conservatorship, and that may not necessarily be you.
Creating a medical power of attorney allows your child to designate a trusted advocate who can step in.
2. HIPAA Release
Along with having a medical power of attorney, your child should also have a Health Insurance Portability and Accountability Act (HIPAA) release allowing you or another trusted individual to have access to their medical information in a worst-case scenario. If you aren’t named on a HIPAA release, hospitals and doctors cannot legally discuss your child’s medical information with you.
Your child should provide copies of the release to the area hospital, the college health center, and with their primary doctor, in addition to having accessible digital copies for quick access if needed.
3. Advanced Healthcare Directive (Living Will)
If your child is in a catastrophic accident or something suddenly happens to him or her, knowing the specific decisions you’ll have to make on his or her behalf is vital. An Advanced Healthcare Directive, or living will, will safeguard their wishes. Healthcare rules can vary across state lines, so having ready access to an Advanced Healthcare Directive will allow you to act quickly if something happens.
4. Organ Donation
No parent ever wants to think about the worst case scenario, but knowing where your child stands with organ or tissue donation will take the guesswork out of these kinds of decisions during a crisis.
5. Financial Power of Attorney
Your 18-year-old may not yet have built up large financial holdings, but they may have been named as a beneficiary in someone else’s accounts, insurance policies or estate plan. Without the proper designation in place, the state may be left to decide about your child’s inheritance if something should happen to him or her.
Who would be able to make financial decisions if they become temporarily or permanently incapacitated? Like a medical power of attorney, a financial power of attorney allows your child to name an acting agent who can make financial decisions on their behalf.
But a more likely scenario is simplifying management of student loans, filing taxes, and dealing with financial aid offices on the student’s behalf while they are away at school. This also allows the chosen agent to interact with financial institutions smoothly, as banks and credit card companies frequently restrict parents from accessing their 18-year-old’s account details.
6. List of Assets
No one knows your child better than you; however, once he or she becomes an adult, you may not know all the assets your child has or will acquire. Having them keep a running list of growing assets in their will and estate plan will help them now and in the future.
Additional items to add to the “Now You’re an Adult” Conversation
Life Insurance
Many younger people tend to put this off because they consider themselves “young and healthy,” but that is precisely when they should buy life insurance. They’ll be able to lock in the lowest premiums.
A life insurance policy also protects parents from inheriting co-signed private student loans and covers final expenses, providing vital financial security if they have a spouse, children, or outstanding shared debts.
Their Own Bank Account
They may be used to a joint bank account with you, the parent or guardian, but it may be time for them to fly solo. Encouraging your child to open their own account and a starter credit card will get them one step closer to adult independence. They’ll start building credit and learn how to responsibly manage their finances while you are still available to guide them.
Your Estate Plan
Talking to your adult child about your estate plan and providing access to a notarized copy of your will and other estate documents will help them understand the importance of taking these first steps. It will also give them insight on what they may consider down the road as their lives continue to evolve.
While picking out dorm decor and getting them ready for their first year away from home is fun and exciting, having these necessary conversations is just as important. It’s hard to think about the reasons why your child might need a will or estate plan, but knowing you have something in place should the need arise will give you peace of mind.