Picture this…your child is in the hospital, but the on-call doctor won’t talk to you let alone allow you to weigh in on medical decisions. And while hospitalized, your child’s bills are going unpaid because you can’t access their accounts—potentially wreaking havoc on their financial credit. Why? Because they’re over the age of 18.
This birthday milestone legally marks the transition from minors to official adults, bringing with it major changes in legal status. They can vote. Enlist. Get a tattoo. They’re also entitled to privacy rights, meaning that anyone not given explicit rights via a power of attorney (financial), a medical power of attorney, and HIPAA (the Health Insurance Portability and Accountability Act) release, among other important documents, can be denied info and access—even (and sometimes especially) parents.
So you’d think parents would be lining up for the legal keys to their kids’ welfare. Yet according to Ann-Marie Murzin, a Clark-based lawyer specializing in family estate planning, the vast majority of parents don’t take the time to have their child okay access, even though it’s easy to do online or with the help of an attorney. “They rarely think of doing it until there’s a problem,” she says, making already stressful situations unbearable. Which is a shame, given that a bit of planning goes a long way in saving “time, money and peace of mind,” says Murzin. Here’s what every family should have:
A POWER OF ATTORNEY
A power of attorney (POA) essentially endows an agent (a parent) with the right to act on behalf of a principal (your adult child) in matters limited only to one’s need for specification. It can be “springing” and activated only upon “incapacitation” or some specified event, or immediate/durable which is preferable among anxious parents picturing their kids woozy in the ER.
“It’s better to have broad power and have it be immediate and not have to meet any definition,” says Murzin. States typically honor each other’s POAs, but it never hurts to draw one up for the state your child will be studying or living in, even if temporarily. They’re typically broken down into two separate documents:
• POWER OF ATTORNEY / MEDICAL
This allows parents to discuss their 18+ child’s medical condition with a health provider, and gives them the right to make decisions on their behalf if they’re unable. Some kids may not be so into mom having an all-access pass to chat up their doctors—in this case, they can opt for a springing POA that kicks in for surgery or unconsciousness, but doesn’t allow for discussions of, say, STDs.
• POWER OF ATTORNEY / FINANCIAL
This allows parents to pay bills, make deposits, pax taxes, and make other financial decisions. According to Murzin, it can also include things your kids won’t mind like the right to pick up their packages, and things they may balk at but could be critical in a crisis, such as passwords to online accounts and groups. “If there’s an incident, the social media may be relevant,” she says, noting the legal hurdle it would require otherwise to get access.
When kids become legal adults, they have a right to complete health privacy under HIPAA. That means no one can see their information without permission—and that means you, even if you’re paying for college or they’re still living in your basement. Ask your child to sign a HIPAA release form (which is often included along with the medical power of attorney), to allow health providers to share relevant information. Signees can also exclude certain information, such as disclosures regarding sex and drugs.
You may be spending a small fortune on college. Guess what? It doesn’t entitle you to view your child’s GPA. “Schools have no obligation to tell you about their grades,” says Joan Mistrough, owner of Money Proud Financial Coaching in Metuchen. “A lot of parents get really upset about that because they feel like they have the right to see them, and the fact is they don’t.” This is because the Family Educational Rights and Privacy Act (FERPA) gives parents legal rights over their minor’s academic information—a right that transfers upon turning 18 or starting college. The work around? Most schools offer students the opportunity to sign a FERPA release allowing parental access. Parents can also formally request access for kids who are still tax dependents. Discuss FERPA with your child to come up with a solution that respects both their independence and your hefty financial investment. Here’s what else you should think about:
Once your child turns 18, accounts and investments held in their names may become theirs. Check with your banks or investment manager to find out what your next steps are in terms of transferring assets. If willing, you should also have your child designate a beneficiary, and add you as secondary (aka authorized signer) on accounts allowing you access without ownership (assuming they want your continued help managing the account).
Does your child need a will? Maybe not if they have few assets. “If they have a trust fund, that’s a different scenario,” says Murzin, though a simple will never hurts. It may, however, be a good time for you to revisit your will and trust to see how circumstances changed. If you don’t designate when (at age 30; upon marriage; etc.), how (for college/trade school; to start a business, a home, etc.), for whom (kids, grandkids, friends) and in what percentage you’d like your money to be distributed, any of your beneficiaries over the age of 18 can spend their inheritance anyway they see fit.
Young adults are inundated with credit card offers—a practical life necessity that often drives inexperienced spenders deeply into debt. The smartest and safest way to get a card, according to Mistrough, is to add your child to your account. The benefit is two-fold: Parents can monitor transactions (how much on pizza?) and students get an immediate bump in their credit score, a must for things like renting apartments, signing up for utilities and getting their own phone (you can’t pay for it forever). “A good credit score can be golden for them,” she says. “But the main thing is to teach them skills and how to be responsible with money.”
And that’s the point of a continued connection to your children. It’s not to micro-manage or control them, but rather to have their back and support their growth.
“Give them wings but also don’t let them crash,” says Mistrough. “It’s a balancing act for sure.”
Jennifer Kantor is an education, parenting and lifestyle writer and a Maplewood mom of two.