Legal Readiness for College-Bound Teens: What Parents Need to Know
As the proud parents of new high school graduates, you are likely filled with excitement and busy with graduation festivities. With college on the horizon, it is important to start the summer by considering several key legal preparations that will protect both you and your child as they embark on their journey to adulthood.
Important Legal Documents
Once your child turns 18, they are considered an adult, which means you no longer have automatic authority to make decisions on their behalf. This is true even if you are paying for their tuition and medical expenses. Here are some key documents to ensure they are protected:
Statutory Short Form Power of Attorney: This document enables you to manage financial transactions, access bank accounts, sign forms, and oversee other business matters on behalf of your child. This provides you peace of mind, as well as a level of protection for young graduates who may be new to or ill-prepared for these financial responsibilities.
Health Care Directive: Appoint a health care agent – typically a parent – to make medical decisions if your child becomes incapacitated. This document also includes a HIPAA Authorization, allowing health care providers to share medical information with you, enabling informed decision-making. Making sure this document is available to the appropriate healthcare system by uploading it into the child’s patient portal ahead of time (or having your child route it to the appropriate school department (often called Health Care Services or something similar) is often beneficial.
Digital Property Authorization: This allows your child to designate someone to manage their digital assets, such as social media accounts and emails, in case of incapacity. This is increasingly important as digital presence grows.
Insurance Considerations
Insurance is another critical area that can safeguard your child’s future and your financial stability:
Renters Insurance: If your child lives in on-campus housing, check your homeowner’s policy to see if their belongings are covered. For off-campus housing, they will need their own policy.
Term Life Insurance: With the increase in student loan debt, consider a term life policy, especially if you cosign private loans. Federal loans are typically discharged upon death, but private loans are not, potentially leaving you responsible. Moreover, for most young adults, life insurance is relatively inexpensive (certainly much cheaper than their tuition!).
Car Insurance with General Liability Coverage: Work with your property casualty insurance agent to ensure you have adequate coverage if your child will be driving a car at college and discourage your child from loaning “their” car to others. Some clients have also chosen (after talking with their insurance agent) to register any college child-driven car in their child’s name to limit parental liability.
Umbrella Policy: An umbrella policy extends beyond standard homeowner’s and auto insurance limits, providing additional protection in the event of major claims or lawsuits. Discuss this with your insurance agent as well.
Additional Legal and Practical Considerations
Estate planning for children: Most college bound children are not in need of a comprehensive estate plan. Should your child have significant assets, powers of appointment, or a desire to leave any assets to anyone other than Mom and Dad, you may want to consider having your child working with an attorney to prepare a will or a will and a revocable trust. Very few of our clients do so, but, in the right circumstance it may be a good idea.
POD and TOD Designations: Most clients for college-bound children choose to make sure that they have Payable on Death (POD) and Transfer on Death (TOD) designations on their children’s bank and investment accounts. These designations ensure assets can be transferred directly to named beneficiaries without going through probate and simplify the management of these assets in unforeseen circumstances.
Credit Card Considerations: It might make sense to add your new college student as an authorized user on one of your credit cards. This allows you to monitor their spending and helps them start building a credit history under your guidance. Establishing good credit is crucial for future financial activities such as renting an apartment or buying a car. Discuss spending limits and responsible credit usage with your child to ensure they manage their finances wisely and avoid accumulating debt (either for you or for them).
Selective Services Registration: Many people are not aware that male students need to register with the Selective Services System within 30 days of their 18th birthday. Starting in 2024-25, registration no longer affects a student’s eligibility to receive federal student aid.
Voter Registration: Encourage your child to register to vote and become informed. Participating in elections is an important civic duty and often one of the easiest adult experiences.
FERPA and Educational Privacy: Educate yourself and your child about the Family Education Rights and Privacy Act (FERPA), which governs access to educational information and privacy.
Understand Campus Policies: Discuss the importance of adhering to campus safety rules, and the legal implications of underage drinking and drug use.
Caveats and Considerations
While it is generally beneficial for parents to have legal authority to assist their adult children, there are situations where it might not be appropriate. If relationships are strained or privacy is a concern, your child might prefer to designate another trusted individual to act on their behalf. Open discussions about these documents can lead to productive decisions that respect everyone’s wishes. This is also an excellent way to introduce your young adult to practical estate planning and financial management.
Consulting Professionals
It is wise to consult with an attorney to tailor the documents suggested above to your specific needs and to any state-specific laws. An attorney can also clarify any legal nuances and ensure that all preparations are effectively managed.
At Henson Efron, our attorneys are experienced in estate planning matters, including powers of attorney, health care directives, digital property authorizations, and insurance planning. If you’d like our assistance with implementing these strategies for your young graduates, please contact Henson Efron.
The purpose of this article is merely to provide general information and may not be construed as legal advice.
Christopher BurnsMy clients receive my undivided attention. I focus on learning your story and understanding your specific needs. With a broad base of legal knowledge, I will thoughtfully consider your issues, identify your options, and strategically use the right tools to accomplish your goals. With over 20 years of experience, I bring considerable expertise in the following areas: estate planning: planning and preparation of wills, revocable...
Brigitt OrfieldI feel privileged to assist with your estate planning and grateful to be allowed into your life. Experiencing a variety of life events with clients builds trust, and I am proud of the long-standing relationships I have developed over the past 23 years. I work closely with individuals and families to plan for the transfer of wealth during their lifetimes and upon death with the...
