Financial Considerations When Your Child Turns 18
18 years ago you brought home your little bundle of joy, and now he/she is ready to move out. Whether or not you are happy to have an empty nest (or half empty nest), you must consider a few things before sending them off. Once children turn 18 parents can no longer make legal decisions for them that are considered private, unless they have the child’s permission.
A couple things parents of college-bound kids should note
- Parents cannot be notified of a student’s grades at college or enrollment status without written permission from the student.
- Parents will not necessarily know about any bills in the student’s name that are outstanding.
- Parents (without express consent from their child) cannot get details of the child’s medical condition, and they no longer have the ability to make long term decisions regarding the 18 year old’s healthcare or treatments.
So, what documents should my child have?
- Healthcare power of attorney- While you might think of this as something you would only use with an older individual, a healthcare power of attorney is equally important for college age children. This document gives parents the ability to make decisions about their children’s healthcare. If your child goes to school out of state, you should get a health-care power of attorney in both your home state and the school’s state because some health-care professionals may be hesitant to accept a form they do not recognize.
- HIPAA Authorization-The Health Insurance Portability and Accountability Act allows doctors to speak about a student’s medical condition with whomever the student stipulates. They can set limits on how much or what type of information parents can access. Experts suggest that students fill out “blanket” HIPAA authorizations, giving parents full access to their health records.
Why? Well, let’s say that your college-aged son attends an out-of-state college and becomes hospitalized for a broken leg. Without a blanket authorization, you will have to contact your son’s physician and hope that the doctor has your son’s HIPAA authorization on file.
- Financial Power of Attorney- This document allows parents to manage their children’s finances. What exactly does this entail? Well, essentially it authorizes parents to act on your son or daughter’s behalf on some or all financial matters. Say your daughter gets in a car accident, leaving her temporarily unable to make financial decisions for herself. Without this document, the parent would have to be appointed a guardian for the student through an expensive court process. The financial power of attorney can also be helpful after your children leave school, to act on the child’s behalf to make loan payments or facilitate forbearance on the loan.
- Education Record Release- Students are required to provide written consent before parents can access grades, transcripts and any disciplinary records. Most colleges notify parents of this requirement, but it remains an area of oversight for many families. There is a lot at stake if your child does not sign an education record release. If your child ignores a notification that financial aid documents are not complete, he/she could lose a scholarship or be unable to progress forward with their studies.
There is a lot at stake if these documents are not in place. While you certainly hope you have prepared your child to take care of themselves, you may still be their fallback for emergencies. Not having permission to make legal decisions for your son or daughter can be a source of great anxiety—make sure you sit down with your son/daughter before they head off to college and ensure that they understand what is at stake if they do not have these signed documents.
Questions? Contact any member of KLR Wealth Management, LLC.
Published on: 01.11.18