Estate planning is not only for adults in their later years; every 18-year old should have these two documents in place.
Mary,* a former client, was very proud of her daughter Rachel. Rachel had graduated high school with very high grades and was accepted into the college of her choice. While attending college, Rachel signed a year-long lease with some friends to rent a house near campus. During the term of her lease, Rachel spent a semester in Australia for a study abroad program. While out of the country, an issue arose with Rachel's landlord over a certain provision in the lease. Resolving the issue with the landlord while Rachel was in Australia was not possible. To make matters worse, Rachel's study abroad program (and her bank account) prevented her from flying back to Michigan to resolve the problem with her lease. This put Rachel in a tough predicament, and Mary, as a concerned parent, wanted to help.
In most instances, a parent would be powerless to help their college-aged child resolve their problem. This is because a parent has no automatic legal authority to handle the financial or medical affairs of their child once that child turns eighteen. Luckily, Mary, an astute client, encouraged her daughter to execute an estate plan.
Before leaving for Australia, Rachel executed a general durable power of attorney naming her mother as her agent. This document gives Mary the legal authority to handle her daughter's financial affairs when Rachel is unable to, and allowed Mary to resolve the issue with her daughter's landlord. Had Rachel not executed the power of attorney when she did, her dispute with the landlord would likely have gone unresolved.
The importance of having powers of attorney in place for young adults has been recognized by Forbes, with financial journalist Deborah L. Jacobs noting:
“if a young adult is in an accident and becomes disabled, even temporarily, a parent might need court approval to act on his or her behalf.”
Court approval is often necessary because in the absence of a general durable power of attorney for financial matters and a patient advocate designation (commonly referred to as a medical power of attorney) for healthcare decisions, a parent would have to file a petition in the probate court in the county where there child is living to establish authority to complete even the most basic of tasks related to their child's finances or healthcare. These probate court proceedings— guardianship for healthcare and conservatorship for finances— can be costly, slow, and a hassle. Furthermore, powers of attorney remain privately administered affairs, whereas a guardianship or conservatorship involves continual court oversight, strict record keeping requirements, and regular reports to the court.
Thus, doing a small amount of planning now can save your family from a large amount of hassle later. Powers of attorney can be executed quickly and without great expense. Contact Jim Wald Law to help and we can provide your family with some additional peace of mind knowing that if something happens to your adult children, you will be ready and able to help.
You can read the full Forbes article by Deborah Jacobs quoted above by clicking the image below.
*For purposes of this blog post, client names and details have been changed to preserve anonymity and the attorney-client privilege.