Eighteen is an unusual birthday.
Your child may still live at home. You may still pay tuition, car insurance, the cell phone bill, and most other expenses. Your child may remain on your health insurance and may still be claimed as a dependent for tax purposes.
From a parent’s perspective, not much may have changed.
Legally, quite a bit has.
Once a child reaches the age of majority, which is 18 in Florida and most states, parents no longer have the same automatic authority they had when their child was a minor. That can affect access to medical information, the ability to communicate with healthcare providers, and the ability to handle certain financial or legal matters on the child’s behalf.
For families sending a child to college or helping one begin life away from home, that change is worth understanding before an emergency occurs.
The Healthcare Surprise
Consider a college student who is injured or becomes seriously ill while away from home.
The parents may pay for the child’s health insurance. They may know the medical history. They may be the first people their child would want involved.
But their son or daughter is now an adult.
Federal medical privacy rules and other applicable laws can limit what healthcare providers may disclose without the adult child’s authorization. Although exceptions may apply depending on the circumstances, parents should not assume they will automatically have the same access to information they had before their child turned 18.
Appropriate healthcare authorization documents can help address that issue.
Financial Decisions Change, Too
The same principle extends beyond healthcare.
Once a child becomes an adult, a parent generally cannot simply step in and conduct financial or legal business on the child’s behalf merely because they are the parent.
A properly prepared durable power of attorney can authorize another person, often a parent, to handle specified financial and legal matters if needed. Depending on the family’s circumstances, other documents, including healthcare directives and medical information authorizations, may also be appropriate.
These documents can be particularly important when a young adult is attending college away from home, traveling, studying abroad, or otherwise becoming more independent.
A Small Estate Plan for a Major Transition
When people hear “estate planning,” they often think about substantial assets, trusts, inheritances, and decisions made much later in life.
For an 18-year-old, estate planning usually looks very different.
The young adult may have few assets and relatively simple finances. The immediate concern is often not transferring wealth. It is establishing who can receive information and who can help make or carry out decisions if something unexpected happens.
That makes turning 18 a useful financial planning milestone for families.
Documents to Consider When Your Child Turns 18
The documents that are appropriate will depend on the young adult’s circumstances, but families may want to discuss the following with an estate-planning attorney:
- Durable power of attorney
- Healthcare surrogate/healthcare directive
- HIPAA or medical-information authorization
Legal and Financial Responsibilities
Along with opening accounts, establishing credit, beginning to save, and learning to invest, young adults can also begin learning something else: adulthood comes with legal and financial responsibilities their parents previously handled.
Financial and Legal Checklist When Your Child Turns 18
- Discuss healthcare authorization documents.
- Consider whether a durable power of attorney is appropriate.
- Review bank and financial account access.
- Begin establishing credit responsibly.
- Establish a savings and investing plan.
- Review insurance coverage and beneficiaries where appropriate.
- Talk with an estate-planning attorney about appropriate legal documents.
At Howland and Associates, we help families incorporate major life transitions into their broader financial plans. If your child is approaching adulthood, this can be a good time to review your family’s financial planning strategy and discuss appropriate legal documents with an estate planning attorney.
Contact our team to schedule a financial planning conversation for your family.
Your 18-year-old may still need you just as much as they did at 17.
The difference is that the law may now require their permission for you to help.