Do your young adult children need an estate plan?

July 11, 2019

 Many young people think nothing can happen to them, but every day we can read about young lives impacted by major illnesses, accidents or acts of violence. We all know about tragedies that have taken place.

In most states, once a child turns 18, parents lose the ability to make decisions for their child or even to find out basic information. It’s frustrating not to be able to see your college student’s grades without his or her permission.

 

A medical emergency can take this frustration to an entirely different level. Unless the proper documents are in place, the parents may need to go to court to ask to be appointed guardians for the child so decisions can be made about medical treatment. Parents are then under the supervision of a judge.

 

This all gets into the estate-planning realm. Everyone age 18 and older should have four basic documents. These are a will, a durable financial power of attorney, a living will and a health care power of attorney.

 

Let’s look at the last two first.

 

A living will is sometimes called a medical directive. This document comes into play when you are terminally ill. It spells out your preferences about certain kinds of life-sustaining treatments. For example, you can indicate whether you do or do not want things such as tube feeding, cardiac resuscitation or use of a mechanical respirator.

 

The health care power of attorney gives another person the legal authority to make medical decisions if you aren’t able to do so. For example, you might be unconscious or in a coma and not able to make decisions for yourself.

 

The person you name as your health care agent in the power of attorney document can make any necessary health care decisions for you. He or she can see that doctors and other health care providers give you the type of care you wish to receive.

 

The next important document is the durable financial power of attorney. In this document you name someone to make financial decisions for you if you are physically or mentally unable to do so. The person you name can pay bills, handle investments and make other financial decisions.

 

A “regular” power of attorney ends at incapacity, but a “durable” power remains valid even if you are incapacitated. An attorney can draft this so that it doesn’t go into effect until you are incapacitated.

 

The final document is the will. This is the most common estate-planning document. Most young adults don’t have substantial assets, so a simple will indicating who will inherit assets is probably all that is needed.

 

Your child should also designate beneficiaries of any brokerage and retirement accounts such as IRAs and 401(k)s. By doing so, probate can be avoided for those assets and estate administration can be simplified.

 

If your young adult child has a spouse and children, things become a bit more complicated. Guardians should be named for the minor children in case neither spouse is able to raise them.

 

An appropriate amount of life insurance should be in place in case one of the spouses dies. This provides money that the family can use to replace the income of the deceased spouse. Many young couples buy term insurance because a large amount of coverage can be purchased for a relatively low cost.

 

We all hope that nothing bad will ever happen to our children. A trip with your child to your estate-planning attorney can definitely help to prevent a bad situation from becoming worse, and it can give all of you some peace of mind.

 

Posted: Thursday, August 11, 2016 9:23 am

Mountain Mail Newspaper

Salida Colorado

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