It might be the dog days of summer, but many young adults are looking at leaving for college for the first time or gearing up to head back to college after some quality time with the family. People view estate planning as something that they do when they start acquiring significant assets, have children, or even something to start when they retire. They do not consider estate planning part of their back-to-college checklist. However, when a child turns eighteen, getting them started with their estate plans is critical. They are no longer minors, and parents no longer have legal rights to be involved in decision-making. It is essential that every individual 18 and older has, at a minimum, an incapacity plan.
Because most young adults do not have many assets, a trust may not be necessary. The threshold amount of assets that will trigger the necessity to file probate is $184,500. If the total value of the assets of your young adult is less than that, a basic will or beneficiary designation on bank accounts is a good option.
Suppose your young adult becomes incapacitated for any reason, accident, or illness. In that case, they will need a power of attorney to manage their finances, and they will need a healthcare agent to make medical decisions for them or to access medical records. Do they need their mom to get their immunization records for them while they are away at college? She will need a HIPAA waiver to obtain any medical records. Now that the children are eighteen, parents are no longer allowed unfettered access to their children’s records.
These include educational records. The Family Educational Rights and Privacy Act (FERPA), similar to HIPAA but not health care related, covers all educational records. Under this law, for students under the age of 18, the FERPA rights belong to the parents. Once a student turns 18, the student holds the FERPA rights. Students must provide written authorization before their schools can disclose any information to their parents or anyone else. This includes disclosure of billing information, grades, and disciplinary records. FERPA authorizations are made available by every school for students to complete. A power of attorney will not work for educational records; you must have a FERPA authorization.
If a child goes off to college out of state, they may want a power of attorney or health care directive tailored to the laws of the state where they reside.
We suggest an incapacity package for every college student or young adult. A comprehensive plan would include the following:
- General Durable Power of Attorney
- Advanced Health Care Directive
- Authorization for Release of Protected Health Information
A general durable power of attorney allows a person, or an agent as they are called, to be able to make financial and legal decisions and arrangements for you. An advanced health care directive allows a person or agent to make medical decisions for you as well as has instructions for your agent with your wishes for end-of-life care, organ donation, and others. Authorization for the release of protected health information allows your named agents to obtain your medical records so that they can either assist with your medical care, such as transferring your records to a new doctor, or to be able to make better-informed decisions about your care. Because of the Health Insurance Portability and Accountability Act (HIPAA), most doctors or hospitals will not release any information without one of these authorizations.
While an incapacity package is not what people think of in the traditional sense of an estate plan, it is a crucial piece of an estate plan and sometimes even more critical than a will or a trust. An incapacity package often eliminates the need for a temporary or permanent conservatorship that could be required in the event of a person’s incapacity, saving thousands of dollars in legal fees. Add an incapacity package to your back-to-school checklist while giving yourself peace of mind.
Our Absolute Trust Counsel team would love to offer all of you access to ATC’s Incapacity Planning resource page at https://absolutetrustcounsel.com/incapacity-planning/ We’ve collected our top planning information all in one place so visitors can find videos, guidebooks, blog posts, a host of information with tips and strategies on implementing, planning, and protecting themselves and their loved ones.
[AD] Incapacity is a critical possibility, and it’s something that everyone should have a plan for. The proper guidance and plan will ensure you are protected and that your money won’t be wasted on court and attorneys. Schedule a free discovery call so we can discuss your concerns and needs. Visit https://absolutetrustcounsel.com/scheduling/ or call us at (925) 943-2740.