I always try to lighten the mood in client meetings when we begin to discuss the topic of estate planning. It is a heavy topic and not an easy one to talk or think about. No one wants to imagine a time in which they are incapacitated or pass away, and they certainly do not want to think of these situations for their children.
When an individual turns the age of majority, 18, they are considered a legal adult. I know at 18 I sure did not act like an adult, but legally I was and I should have visited an attorney with my parents to get the following legal documents in place.
1. Durable Financial Power of Attorney (DFPOA)
A DFPOA allows your children to name individuals who can act on their behalf for all financial matters if they were to become incapacitated. For example, a parent could access their child’s bank account to pay a bill if their child was incapacitated.
2. Durable Health Care Power of Attorney (DHCPOA) and Living Will
These documents can either be combined into one document or can be separate. The DHCPOA allows your children to name individuals who can make medical decisions for them while they are incapacitated.
A Living Will outlines your children’s wishes for end-of-life decisions. These documents would allow the parents, if named, to make medical decisions for their children if they were in a serious accident or medical situation. Without these documents in place, medical providers are not legally bound to discuss the health of legal adult children with their parents, a scary thought indeed.
3. HIPAA Release
HIPAA stands for Health Insurance Portability and Accountability Act, which took effect in 2003. The execution of this document allows those listed to have access to your children’s health information to better make both financial and health care decisions for them.
What About a Will?
Some parents may think their children also need a Will, but this is not always the case. Your children will only need a Will if they have property that would need to be transferred upon their death that would not automatically be transferred via a Transfer On Death, Payable On Death or beneficiary designation. In general, this would possibly become necessary once your child is in their late 20s and/or married. That said, a Will is 100% necessary if your children have children of their own, as the Will designates a legal guardian for your grandchildren if your children were to pass away.
Though estate planning is never an easy topic to address, it might be one of the best gifts you can give your adult children. I recently helped facilitate this process with a client and her daughter, and I saw firsthand how empowering it was to them both. As a bonus, it also served as a nice introduction between the daughter and her mother’s attorney.
I’d encourage you to take a few minutes to set up an appointment with your attorney. (Your Wealth Manager would also be happy to organize it if you prefer.) A nominal fee—usually no more than a couple hundred dollars—is all it takes to create invaluable peace of mind for yourself and your children.
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This post was written by a guest blogger for the Plancorp Women’s Initiative, which strives to advocate for clients and women in the community by addressing topics specific to their financial lives. For more information about the Women’s Initiative and how you can get involved, email Haleigh@plancorp.com or visit the Plancorp Women’s Initiative page.
