Why would SYAs need estate planning? Think of SYAs – age bracket 18 to mid-20s: no spouse, no kids, no money (or not much). SYAs in college (and often beyond as SYAs get started), are in many ways adult children. This isn’t negative or demeaning, it’s realistic. SYAs look to their parents for guidance navigating the transition from childhood/youth to independent adulthood. Legally, however, at age 18, the SYAs are adults. A parent cannot legally act for the SYA even though he/she remains a dependent.
Has any SYA on his or her 18th birthday, ever said, “Gee, I need powers of attorney in case I’m in an accident, or I get hurt at football, or gymnastics practice?” Unlikely. What SYA filling out the paperwork at a new job thinks, “I wonder who I should list as my beneficiary for group life insurance or my 401(k)”? Few,if any. These considerations are just not part of the SYA’s mental landscape.
So, who needs estate planning? SYAs and their parents, or whoever are the responsible adults in their lives.
A “basic SYA estate plan” will include at least the following components.
- Health Care Power of Attorney (“HC POA”). Except in an initial emergency immediate life-saving event, the HC POA is necessary for access to health care information and to make medical decisions for the SYA. The legal authority given in the HC POA ranges from treatment, recovery and rehab decisions to end-of-life. No HC POA? A parent must go to Court with a physician’s written opinion and petition to be appointed Guardian of the Person of the SYA child. And thereafter, report and account to a judge at least annually, or as often as a judge may require. Delay, inconvenience, expense, potential conflict: these are the price of no HC POA.
Real life illustration: A 20-year old driving cautiously in snowy weather to her part-time job at a nursing home. The car ran off the icy road and slammed into a fence. The SYA sustained severe head and chest trauma. Her parents had to go to Court and initiate legal proceedings in order to make medical decisions for their SYA daughter even while overwhelmed at the family tragedy.
- Property Power of Attorney. This document gives authority to a designated individual to sign legal and financial papers, including insurance claims and tax returns, handle banking, even litigation matters. In the real-life illustration above, the parents had to be Court-appointed to handle the flood of paperwork following the SYA’s accident. The Guardian of the SYA Estate must report back at least annually to the Court with detailed accounting of all the income and expenses and get prior approval for financial decisions. Again, delay, inconvenience, expense: the true cost of not having the Property POA.
- Will. Should a SYA die without a will, a Court Probate may be necessary. The parents must be appointed administrators, and a potentially expensive bond posted. In a will, the SYA names the executor and waives bond. The SYA also directs who is to receive his or her property. Parents who have substantial estates of their own may prefer, in the event of death, the SYA’s property pass to siblings or to charities which the family supports. A will is worded broadly so the executor has independent authority to handle whatever the circumstances without the delay, uncertainty, and expense of Court approval.
- Living Trust. Optimally, the SYA has a revocable living trust, regardless of wealth. The trust avoids loss of privacy, the delays, inconvenience, uncertainty, and cost of probate. It can be the beneficiary of life insurance, IRA’s and 401(k)s. If parents or others have opened investment or savings accounts for the SYA, the trust can hold the account. The trust directs where the estate of the SYA goes at death, without probate and its associated costs.
Parents and parent-surrogates can do an educational and caring service for their SYAs: by encouraging and arranging for them to meet with an estate planning attorney and get a “basic SYA estate plan” in place. The SYA may not fully appreciate it immediately–after all, they have a thousand things going on in their lives. For the parents though, it’s the gift of peace of mind.