Upon turning 18, a person is legally considered to be an adult, even if still dependent on his or her parents for financial support (or for making dental appointments!). This means that parents lose the ability to make certain financial and medical decisions on behalf of their child. Young adults can benefit from establishing a basic estate plan that includes:
- Durable power of attorney
- Health care proxy
What is a durable power of attorney?In a durable power of attorney, the young adult (“principal”) grants a designated agent the authority to make decisions regarding his or her financial assets. The power of attorney becomes effective when it is signed and may be revoked at any time while the principal is competent. An agent can act in a principal’s stead in a wide variety of financial matters, such as withdrawing money from a bank account, paying bills and filing tax returns.
A power of attorney can be particularly helpful while a child is away at college, traveling or studying abroad for a semester.
What is a health care proxy?A health care proxy allows the young adult (the “principal”) to name an agent (or “surrogate”) to make health care decisions on his or her behalf. A health care proxy does not become effective until the principal is incapable of making his or her own health care decisions, and the principal may revoke it at any time while living and competent.
In an emergency situation, the designated agent (typically a parent of the young adult) can make medical decisions on the principal’s behalf and will be given access to the principal’s medical information. This is important so that the agent can make informed decisions on the child’s behalf. Without a health care proxy in effect, parents may encounter resistance from doctors or other medical personnel when the need arises.
A health care proxy may also include a “declaration of wishes” or a “living will,” which provides guidance to the health care agent when acting on behalf of the young adult. (Continue Reading)
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Estate planning documents every young adult should have