Turning 18-years old is an important milestone for children and their parents. At this age, children begin to take on many responsibilities, including making financial, legal, medical, and other major life decisions for themselves. While children are minors, parents are responsible for making decisions on their behalf. However, once an individual turns 18, he or she becomes an adult in the eyes of the law. For this reason, it is important to consider estate planning once a child reaches adulthood.
As a general rule, young adults should appoint another person to make decisions on his or her behalf in the event of their incapacity. A healthcare or financial power of attorney can give the individual(s) selected the authority to make healthcare and financial decisions on his or her behalf in case he or she becomes incapacitated. Alternatively, advance directives (e.g., a living will or do-not-resuscitate (DNR)) help guide the specific decisions of doctors and caregivers if a person becomes incapacitated and incapable of expressing his or her wishes regarding medical treatment. A Health Insurance Portability and Accountability Act (HIPAA) authorization should also be considered, as it gives medical providers permission to release and share an individual’s medical information with others, including his or her parents or other family members. This is especially important not only in the event of an accident or other emergency, but also if a parent of a college-bound child needs to obtain immunization records from a physician or complete other medical forms required by the college.
Once an individual reaches majority age, they may begin to earn income and accumulate assets, if they have not already done so. Some may have existing assets they acquired as minors in a custodial IRA account or a UTMA (Uniform Transfers to Minors Act) account to consider. Having an estate plan can help them to protect themselves, their assets, their family, and their future. Wills can be an important estate planning tool as they outline, in accordance with the testator’s wishes, the distribution of an estate. Most young adults do not have substantial personal assets, so a simple will may be all that is needed initially. If a person dies without a will, known as dying intestate, their assets will be distributed following their state’s intestacy laws.
As young adults start to make major life decisions, planning for the future is vital. In the event of a tragic incident, surviving family members can benefit from knowing the young adult’s exact wishes. An estate planning attorney can help a young adult determine the ideal estate plan for his or her unique needs. In addition to helping to coordinate a meeting with an estate planning attorney, parents may also consider taking the time to teach their young adult child(ren) the importance of establishing and maintaining a relationship with a trusted financial advisor –not only to jumpstart their financial education as an adult, but also to plan out future financial goals.