(Leonetta Rence, CTFA | Vice President and Senior Trust Officer, Cornerstone Private Asset Trust Company, LLC)
We fall in love with our new bundle of joy when they are handed to us at birth or when we welcome them into our hearts. We spend the next eighteen years nurturing our children, putting band-aids on scraped knees, doling out hugs when needed, lending an ear, providing a shoulder to cry on, and giving them advice when they are willing to listen. Our role is to protect them and provide guidance.
As you send your children off to college this fall, you and your child need to prepare. No parent wants to have estate planning discussions with our children at age 18, but it is necessary. Do you know that once your children turn 18, you no longer have all rights and decision-making authority for their health and financial matters? A Financial Power of Attorney (FPOA) and Health Care Directive (HCD) will make it easier for you to sleep at night, knowing that your children continue to be protected.
Financial Power of Attorney
A FPOA is a legal document that allows an individual, referred to as the principal (your child), to give one or more persons the authority to act on their behalf for their personal property or finances. The person assigned the authority is referred to as an agent. By naming a parent as the agent, your child has given you the authority to manage their financial affairs in the event of an emergency or if they cannot help themselves.
I know you are thinking, I want them to be independent and manage their finances. Great idea, but it is not always feasible, and things happen. Don’t just think about them being away at college, but all the study abroad experiences they may be participating in.
My daughter was a foreign exchange student in South Korea. We had all these documents prepared for her signature once she turned 18. We thought that we were completely prepared for her stay in Korea. We made a trip to the bank to let them know of the upcoming stint abroad, provided them with a copy of the FPOA, made sure that she had the proper currency, and the bank updated her credit and debit cards to work in South Korea.
I received a panicked phone call about a month into her stay in the middle of the afternoon. Her card was not working, and she had limited foreign currency and went to the bank to take out more. Doing what parents do, I got on the phone with the bank to resolve the problem for her, and they would not discuss the account or the issue with me. During the conversation with the customer service representative, I found out that the banker in the United States had not updated their files, and the bank in South Korea had no authority to speak with me. Luckily, I had the legal documents on hand, but I had to make another trip to the bank to get them to update their records so they could speak with me and resolve this. Neither her debit card nor her credit card was working.
Health Care Directive
A HCD (sometimes referred to as a Living Will) enables an individual (your child) to outline in advance what type of health care measures they want to be taken if they cannot communicate their wishes. The document can be a little frightening because it outlines the individual’s thoughts about life-sustaining measures if they are in a critical or terminal condition or their persistent state of unconsciousness would make a recovery highly unlikely. No one wants to think of their child in such a condition, but would the condition affect their quality of life? Who wants their child to think about these things, but it could be necessary?
Health Insurance Portability and Accountability Act (HIPPA) limits the ability to access anyone’s medical information. At age 18, your child is considered an adult, and health care providers cannot talk to anyone, including family members, about their medical condition. That means you have no access to information about your child’s medical condition. These rules were established to provide privacy, but they could also impede your ability to act on your child’s behalf in an emergency. Doctors and other health care providers will not disclose unauthorized details about their patients at the risk of penalties imposed on them. It does not have to be life-threatening, but it can still be important.
My daughter, an avid soccer player, got hurt on the field at an away game. She wasn’t feeling great when she returned to her dorm apartment and fell down the stairs. The school had a copy of her HCD on file, and someone had the presence of mind to take it with them to the hospital. My daughter had a concussion and was not coherent. The hospital needed someone with authority to permit them to treat her. The doctors could do what was necessary and send her home with instructions to the coach regarding her care. I assume that speaking with me as Health Care Agent gave them a little more sense of security than having to take direction from the coach and her fellow players.
What to Do Next
When you send your child off to school, check with the college or university to see if the documents you have in place will be honored in their jurisdiction. Some states have their own requirements but check with the college or university to determine if they have a valid form in their jurisdiction. Your child should make sure to retain a copy of the documents while at school, and if they are going to be traveling or living abroad, make sure that they tuck a copy in their suitcase.
If your child names you as their agent for both health and financial matters, these documents will allow you to have full decision-making authority if needed, as well as the ability to access their financial and medical records.
If you are interested in learning more, please do not hesitate to reach out. Please contact Leonetta Rence, CTFA at lrence@cornerstonetrust.net.
