Summer is here and graduation season is in full swing. It has been a tough year for our high school seniors with most of their senior year activities canceled due to Covid-19 restrictions. Hopefully, with restrictions lifting, they are looking forward to catching up on summer activities and being able to go off to college in the fall.
Most people view estate planning as something that they do when they start acquiring large assets, have children, or even something to start when they retire. However, most people do not think that there is any estate planning to do at eighteen years old. When your child turns eighteen it is critical to get them started with their estate plans. They are no longer minors, and parents are no longer automatically involved in decision making. It is important that every graduating senior, or eighteen-year-old, has, at a minimum, an incapacity plan.
Because most young adults do not have many assets, a will or trust may not be necessary. The threshold amount of assets that will trigger the necessity to file a probate is $166,250. If the total assets of your young adult are less than that, a will, or other non-probate options may not be necessary. However, there are other documents that are critical.
If your young adult becomes incapacitated for any reason, accident or illness or is unavailable due to travel abroad, they will need a power of attorney to manage their finances and they will need a health care agent to make medical decisions for them or to access medical records. Do they need mom to get their immunization records for them while they are away at college? She will need a HIPAA waiver in order to obtain any medical records. Now that the children are eighteen, parents are no longer allowed unfettered access to their children’s records. In addition, if a child goes off to college out of state, they may want their parents to be able to access their bank accounts or have an advanced health care directive on file with the school in case of emergency.
We suggest an incapacity package for every graduating senior, or upon their eighteenth birthday, whichever occurs first. The incapacity packages include the following documents:
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. An authorization for 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. Get your teen the graduation gift of an incapacity package while giving yourself peace of mind.