Estate Planning for Young Adult Children: What Every Parent Should Know

As your child transitions from high school to adulthood, it can feel like a whirlwind of milestones. They’re applying to colleges, finding their first jobs, and taking on more responsibilities. But amidst all these changes, one important consideration often gets overlooked—estate planning. While it may seem like something only older individuals or those with significant wealth need to think about, the reality is that parents of young adults (i.e. age 18-27) should take steps to ensure their children are protected.  When we talk about estate planning for young adults, we are mainly focused on individuals between the ages of 18 and 27, with a particular emphasis on 18-year-olds. At this age, in most jurisdictions, your child legally becomes an adult, meaning they are now responsible for their own legal and financial decisions. For parents, this transition can be both exciting and overwhelming. While you may have made decisions on their behalf when they were younger, as an adult, your children now have the right to make their own choices. But with that freedom comes the need for you to consider how best to protect and assist your children should the unexpected happen.

Key Estate Planning Documents Every Young Adult Should Consider

1. Health Care Power of Attorney

One of the most important documents young adults should consider is a Health Care Power of Attorney, also called a health care proxy. This document allows a young adult to designate a person—often a parent—to make health care decisions for and on behalf of the young adult if they become incapacitated and are unable to make decisions for themselves. Without this document, if your child is involved in an accident or becomes seriously ill, you may not have the ability to make decisions about their care, or even access their medical records.

2. HIPAA Release

A Health Insurance Portability and Accountability Act (“HIPAA”) Release is another crucial document. Through this document, a young adult can direct health care providers to provide HIPAA-protected information (i.e., your child’s medical information) to certain designated individuals—oftentimes, a parent. Without this, health care providers are prohibited by law from sharing important health information with anyone other than the young adult.  So, even if you are a parent, hospitals and doctors cannot discuss your child’s medical information with you. Thus, a HIPAA release is essential for maintaining communication and being involved in your child’s health care after they become an adult.

3. Durable General Power of Attorney

A Durable General Power of Attorney, commonly known as a financial power of attorney, allows you to make non-medical decisions (including financial decisions) on your child’s behalf if they are unable to do so. This can include managing their bank accounts, paying bills, transferring property, or making other financial decisions. While young adults may not have large financial portfolios, this document is nevertheless useful if something happens to them while they’re living away from home.

4. FERPA Certificate

The Family Educational Rights and Privacy Act (“FERPA”) protects the privacy of students’’ educational records. When your child becomes an adult, only they have control over access to their academic records, which includes grades, class schedule, financial aid, and attendance.  Parents automatically lose access to this information unless they are the child’s legal guardian (this usually only happens in instances of mental disability or special needs).  So, even if a parent is paying for their adult child’s education, the parent loses the right to access their child’s academic records when their child becomes an adult.  As a parent, it’s important to discuss FERPA with your child and, provided they consent, have them sign a FERPA Certificate for your benefit so you access their educational information.

5. Last Will and Testament

While creating a last will and testament may not be the first thing on your young adult child’s mind, there are situations where it could be beneficial. Here are some reasons to consider a will for a young adult:

• Change Default Inheritance: If your child does not want to follow the typical inheritance set forth by state law, they should create a will.  Without one, the probate court will distribute your child’s assets in accordance with the state’s laws of intestate succession (i.e. statute of descent and distribution), which usually follows family lines. You can see Ohio’s default rules here.
• Blended Families: If your child is part of a blended family, a will ensures their wishes regarding their belongings are clear and can help avoid family disputes.  It will also appoint a person to gather their assets and distribute them appropriately through probate.
• Digital Assets: In today’s digital age, many young adults have online assets such as email accounts, social media profiles, and digital photos. A will can specify who will manage these accounts or what should happen to them upon their passing. Young adults should also go directly to the digital asset custodian (i.e. Apple, Google, Facebook) and provide information about who may be granted access to their information should they be incapacitated or die—they can specify when access should be granted and how broad it should be.  Doing this will work like a beneficiary designation and typically avoid the need to open a probate estate to access the designated information.
• Power of Appointment: A young adult may be named as a beneficiary under a relative’s will or trust, such as a parent’s.  Many documents grant to beneficiaries the right or power to appoint their distribution to another person or charity, either during the beneficiary’s life or at their death.  But, to exercise this power of appointment, beneficiaries usually must include specific language in their own will or trust. Thus, creating a will that specifically exercises the young adult’s power of appointment will ensure their assets go to the right people.
• Guardians for Minor Children: A young adult may be pregnant or already have a young child for whom they are the legal guardian. The young adult should create a will and name people who will become the child’s legal guardian if the young adult is incapacitated or dies.

While your child may not need an extensive will at this stage, having a basic document in place can make a difference in an unexpected situation.

Estate planning may not seem like an urgent matter when your child is just beginning their adult life, but it’s an essential step in ensuring their well-being and protecting your family in case of unexpected events. By setting up the right legal documents and planning for future needs, young adults can provide peace of mind to their parents, and make sure they are well taken care of—whether they’re heading off to college, starting a career, or navigating the complexities of adulthood.

It is important to keep in mind that this process requires the involvement and direction of your young adult child—you cannot create an estate plan on their behalf. But, while your young adult must take the lead and direct an attorney with how to set up their estate plan, you can play a pivotal role and ensure you are able to help if an unexpected situation arises. 

If you’re unsure where to start with estate planning for your young adult, a trusted estate planning attorney can guide you through the process, ensuring that both you and your child are fully prepared for whatever the future may hold. At Mulhall Zion LLC, we help families plan for their futures. Contact us today to schedule a consultation and ensure your young adult child is protected.