Money Talks: Going Off to College
Turning 18 is a major milestone in life and one that officially marks a child’s legal transcendence to adulthood. This often coincides with the start of college and poses some unique issues for parents who are about to send their “young adults” off to school. Without the proper legal authority, parents may no longer be able to act on behalf of their newly anointed adult children. Consider what might happen in some of the following circumstances:
“Needing to discuss a medical condition with a doctor due to an unexpected accident”
“Checking with the bank to ensure enough money is in an account”
“Requesting information on student loans or financial aid”
Without proper planning, you might find yourself in the dark when trying to gain access to certain information or even prohibited from making decisions on your adult child’s behalf. Let’s take a look at two very important documents that every parent should discuss with their children when they turn 18.
Financial Durable Power of Attorney – This legal document allows your adult child to grant you the authority to act on their behalf when it relates to financial matters. This will come in handy if you ever need to check on their bank account balances, manage a credit card payment or even sign their tax returns for filing.
Healthcare Power of Attorney – Similar in concept to a financial power of attorney, except this allows you to make medical decisions on their behalf. It’s important that Health Insurance Portability and Accountability Act (HIPAA) authorization is incorporated so you can also access medical information and have discussions with medical professionals.
While parents spend much of their lives raising children to become responsible adults, it’s a smart idea to have contingencies in place should a little parental “safety net” be needed. These contingencies should ideally only be used if an adult child is unable to act on their own. However, setting up a financial and durable power of attorney is an effective way for your adult child to have a proper plan in place should the need arise.