Estate planning for a young adult or college student is necessary despite the fact that most young adults aren’t yet thinking about incapacity, death, or planning for their children. 18-year-olds are legally adults, and thus they (not their parents) speak for themselves regarding health care and financial decisions.

At a minimum, every young adult should prepare and execute a health care directive and a financial power of attorney. These are life documents that we use for incapacity planning.

A financial power of attorney gives someone (called the attorney-in-fact) legal authority to sign on behalf of the principal, and the attorney-in-fact has a fiduciary duty to make transactions in the best interest of the principal (the person granting the power). An attorney-in-fact can pay bills, make credit card payments, pay student loans and deposit checks for the principal if the principal is incapacitated. Since incapacity is not usually a prerequisite for the attorney-in-fact to act, college students studying abroad may elect for their attorney-in-fact to manage their finances while they are out of the country as a convenience or safeguard in case something were to happen.

The other life document for incapacity planning is called a health care directive. In this document, the principal nominates a health care agent who can make health care decisions for the principal if an attending physician determines that the principal is incapacitated. Essentially, this is a planning document for a long-term terminal illness. A physician will listen to a health care agent instead of guessing what the patient would want.

Some young adults may also need a Will, especially if they own real estate and are not married. These simple estate plans consisting of a Will, power of attorney and health care directive are surprisingly affordable and provide peace of mind. Contact us if you are a young adult or are interested in getting documents in place for your young adult child.

Posted by Steven G. Deckert