Estate Planning When A Child Turns 18

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At the age of 18, a child becomes independent. At the same time, parents lose the automatic legal authority to make medical and financial decisions on their behalf. This is true even if the child still lives at home or remains on the family’s insurance. Three documents close that gap: a durable power of attorney, a health care proxy or directive, and a HIPAA authorization. For families with trusts or substantial assets, the milestone can be a checkpoint to review your current estate plan.

Turning 18 brings celebrations and the start of greater independence. It is a legal turning point that can create an unexpected gap in an otherwise carefully designed estate plan. When a young adult falls ill or has an accident, parents may be unable to step in without legal documents. This issue can be particularly important for families who have spent years carefully planning for their children’s financial future. Owners of businesses or large assets should ensure planning covers more than asset outcomes. It must also name who can assist children once they reach adulthood. Families with trusts or estate-planning structures face unique needs in this area.

Start with a Durable Power of Attorney for Financial Matters

A durable power of attorney enables one person to authorize another. That person can act on their behalf in financial matters and other legal matters. A properly drafted power of attorney allows a parent or another trusted individual to assist. This helps with matters that would otherwise require the child’s direct involvement. Without a power of attorney, the parent may be unable to act in many matters. This occurs even if the parent pays the child’s expenses or has historically managed the finances.

family’s financial affairs.

Estate Plan’s Focus on Health Care Decisions

Medical decisions present a similar concern, but the stakes can be much higher. Once a child turns 18, parents generally cannot assume that they will automatically be able to make health care decisions if their adult child is incapacitated.

A health care proxy or health care directive allows an adult to designate an individual to make health care decisions on their behalf if the individual becomes unable to do so. Depending on the document and applicable law, it may also address the person’s wishes regarding treatment and end-of-life care.

This is not limited to college students. An adult child who remains at home, enters the workforce, travels abroad, or otherwise begins living independently faces the same legal transition.

HIPAA Authorization: Access to Medical Information

Even when a parent is designated to make health care decisions, access to medical information is a separate concern. The federal Health Insurance Portability and Accountability Act (HIPAA) generally restricts health care providers from disclosing protected health information without appropriate authorization. As a result, parents may discover that a doctor’s office, hospital, or other provider will not discuss an adult child’s medical condition with them simply because they are the child’s parents.

A HIPAA authorization can permit designated individuals to receive specified medical information. This can be especially important in an emergency, when parents may need information from doctors while coordinating care for their adult child. The HIPAA authorization and health care proxy serve different purposes, so families should consider having both. One addresses access to information; the other addresses health care decision-making when the individual cannot make decisions independently.

Use the 18th Birthday as an Estate Planning Checkpoint

The transition to adulthood is also a useful opportunity to revisit the family’s full estate plan. Parents may have established trusts for their children that contain provisions tied to particular ages or life events. A child turning 18 may also be approaching a point at which they will have greater control over certain inherited or gifted assets. Families with business interests should consider whether the child’s changing legal status affects ownership, governance, succession, or other arrangements involving the family business. Parents should also review beneficiary designations and planned gifts to determine whether existing arrangements still reflect their intentions.  Take advantage of this birthday milestone to confirm that the existing plan still works as intended.

Preparing these documents does not mean parents are taking away their child’s independence. In many respects, it is the opposite. A durable power of attorney, health care proxy, and HIPAA authorization allow an adult child to designate who should be trusted to assist if it becomes necessary. We are here to assist you in preparation of these documents as well as estate plan review. Contact Anthony J. Madonia & Associates, Ltd. at info@madonia.com or (312) 578-9300.