Estate Planning for Young Adults

January 31, 2023 by Autumn Bryant

Here is the bottom line: Children that reach the age of majority (18-years-old in Indiana) are considered legal adults, which means parents lose their rights not only over financial decisions, but also medical decisions. We all remember being 18 years old. We probably thought we could be an adult and handle most things on our own, but the reality is that being an adult is tough and everyone could benefit from help.

When we look at the necessity behind estate planning for 18+ years old, we need to approach it from two places: (1) this is a new transition in life and they need help with finances and medical care, and (2) there may be an instance of an emergency where decisions need to be made on your child’s behalf.

Asset Management

This might seem like a minor issue since not a lot of 18-year-olds or college-aged students have accumulated many assets. However, gaining access to just a simple cash account in order to take care finances on behalf of your child can be a very arduous process if you are in the middle of an emergency and having to fight with a financial institution.

If there has been Uniform Gifts to Minors Act Account (“UGMA” Account) or a Uniform Transfer to Minors Act Account (“UTMA” Account) formed for your child, they can take legal control of the account as a very young adult. In Indiana, an 18-year-old can take control of an UGMA account and at 21 years old, they can take control of an UTMA account. By having Power of Attorney, there can be monitoring and guidance for the use of these funds or in the event of incapacity, the parent with a Power of Attorney can manage funds on behalf of the adult child.

Medical Care

Once your child reaches the age of majority, a parent no longer has access of medical records. This means you cannot obtain medical information, such as immunization records to make sure a college student meets the requirements to go to school. If there is an emergency, you are not able to gain medical information, records, or make medical decisions on your child’s behalf if estate planning has not been done for your adult child.

Essential Documents for College Aged Students

  1. Durable Financial Power of Attorney: A Financial Power of Attorney can allow a parent to handle finances on behalf of the child. You can create either an immediately effective power of attorney that remains in place if the child ever becomes incapacitated. Another option is to create a “springing” power that only becomes effective upon incapacity.
  2. Advance Directive: An Advance Directive assigns a Health Care Power of Attorney, who can make medical decisions if the patient cannot make decisions from themselves due to incapacity. It also contains a Living Will, which is end of life medical care instructions. Additionally, it contains a HIPAA release, which allows medical records and treatment to be released to designated persons.
  3. Last Will and Testament: Depending on what kind of assets your child already has already, it may be prudent to create a Last Will and Testament. At the very least, it is important to make Payable on Death/Transfer on Death/Beneficiary Designations on accounts whether or not a Last Will is appropriate.

Estate planning, even for young adults, is very subjective and there are important decisions that should be counselled through by an attorney. It’s important to discuss your situation, including assets with an attorney before drafting documents.

Contact us today for a no obligation consultation to discuss your situation and goals!