Trust Perspectives: Incapacity Planning for Young Adults

Graduating from high school and getting ready for college, or returning to college, is an exciting time in a young adult’s life. With all the preparation that is necessary, most young adults and their families overlook one of the most important things they should be doing; planning for incapacity. Incapacity planning is typically done as a part of estate planning, but can also be done on a stand-alone basis.

Few 18-year-olds, or their parents, consider the need for estate planning, simply because they generally do not have estates or families to plan for. However, once a child turns 18, not only do parents no longer have the legal authority to make financial or medical decisions on that child’s behalf (even in emergencies) they also no longer have the legal right to access that child’s medical, financial or educational information. This means that without prior planning, not only would parents be unable to make medical or financial decisions on behalf of their child in the event of an emergency, they might not even be permitted to know the details of what happened or the nature of their child’s situation.

Therefore, it’s critical for young adults and their families to set up an incapacity plan that appoints trusted individuals to make medical and financial decisions should the unthinkable happen.

The following documents should be in place to allow decisions to be made in the event of an emergency:

1. Medical Power of Attorney – With a Medical Power of Attorney in place, a designated agent (parent or guardian) has the authority to receive vital healthcare information and make healthcare decisions for the student in the event he/she is unable to do so.

2. General Financial Power of Attorney – With a General Financial Power of Attorney in place, a designated agent could pay bills, handle insurance claims, maintain bank accounts and take care of other financial matters for a young-adult, if the need arose. The power may become effective immediately or it may be “springing” – which means it only becomes effective upon the occurrence of a later event (e.g., student’s incapacity as certified by two physicians).

3. Authorization to Disclose Protected Health Information – The Health Insurance Portability and Accountability Act (HIPAA) set out rules and limits on who can look at and receive an individual’s medical information. This document authorizes healthcare providers to disclose a student’s medical information to certain named individuals. In the unfortunate scenario where a student experiences a medical emergency, this document would give parents, or another named individual, the authority to receive information from healthcare providers regarding the student’s healthcare status and related information.

For each of the forms above, parents should keep the original and the student should have copies. It may be a good idea for a roommate or fellow student to know where the copies are. In addition, the family may want to see if a copy can be filed at the school with the student’s medical records.

Keep in mind that all forms/documents should be reviewed, and possibly updated, each year. There may be separate forms required for your child’s state of residence if they’re attending an out-of-state school.

Final Thought

College is a time of excitement and great change for both parents and their children. While it’s certainly important to ensure that they have the necessary clothing, bed linens and other such items, it’s also important to have the legal documents in place to permit parents to make decisions and access information in the event of an emergency.