Estate Planning for Your Adult Child
The Perfect Gift for the New Adult in Your Family
What are you planning to give your teenager when he or she legally becomes an adult? A car? A deposit for an apartment? A trip to Europe?
These are all fine gifts, depending on how much you can afford to spend. But here is one you may not have thought of—and it will not cost you a bundle.
Take your son or daughter to your attorney’s office and have your attorney prepare a quartet of documents: a simple trust or will, a durable power of attorney, a healthcare power of attorney, and a living will.
Actually, it will be a gift for both of you because once your child reaches legal age, you will no longer be able to make decisions for your child’s health and finances (or even have access to your child’s healthcare or financial information) without the appropriate legal documents authorizing you to do so.
If your child becomes ill or injured and cannot handle his or her own financial affairs, you will not be able to step in and conduct business on your child’s behalf (e.g., sign checks, sell assets, etc.) unless your child has a trust or a durable power of attorney and has named you as successor trustee or agent. If not, you will have to go through the courts—and that will take time, cost money, and restrict you in ways you cannot imagine. Some financial institutions may not even accept a durable power of attorney or may also require their own forms; make sure you and your child check with each financial institution.
If your child cannot make his or her own healthcare decisions, it will be much easier for you to make them if your child has a healthcare power of attorney that names you as healthcare agent, surrogate, or proxy. And what if your child were to become so ill or injured that he or she is placed on life support before you get to the hospital? Unless your child has made his or her wishes known through the appropriate legal document, you may not be able to have the equipment removed without court approval.
Finally, if your adult child were to die without a will, the court will distribute your child’s assets according to the laws of the state in which your child lived, regardless of what either of you would have wanted.
Make sure your new adult child understands that all of these documents will need to be changed as your child’s (and your) life changes: as your child accumulates more assets, and as your child and your child’s loved ones move, marry, have children, divorce, and die.
Helping our children get started with this responsibility at the moment they become adults is an important duty we have as parents. It goes hand in hand with teaching them how to balance a checkbook, handle a credit card, and buy insurance.
Chances are, it will be a long time before any of these documents will be needed. But you will be sending your child out of the nest with a full layer of protection, just in case.