Powers of Attorney and Adult Children
By Ryan and Mike O’Donnell, CFP®
Key Takeaways
Once a child turns 18, many parents are shocked they can no longer help with or inquire about their medical, educational, or financial status, even if they are still supporting them.
Having a Healthcare proxy, HIPPA release and durable power of attorney can give you tremendous peace of mind.
Without these documents in place, you could be leaving your child’s welfare to the courts.
As parents, we always want to do what’s best for our kids. That includes making the right financial and medical decision on their behalf. But things change after your child turns 18 and it can get more complicated if your child encounters difficulties while away at school or working out of state.
I know this is not a pleasant subject, but consider these possible scenarios:
Your 18-year-old daughter goes on a spring break trip to Florida with college friends. While there, she is involved in a car accident and is taken to the hospital unconscious.
Your unmarried son, in his 20s, suffers a severe head injury at his construction job, rendered unconscious, and is rushed to the hospital.
Your daughter is in her 30s and just got divorced. She suffers a stroke that has left her incapacitated and unable to communicate.
Sadly, these situations play out all too often. I bring up Powers of Attorney (POAs) as part of National Financial Literacy month since they’re so important and so often misunderstood.
When there’s a crisis involving the young adult in your life, the first reaction is to contact your child’s medical providers for information about their condition so you can help them. But as a legal adult, your child has rights, including the right to privacy about their medical information. Your child’s doctors cannot release that information to you without your child’s consent, and your child is now in a position where they cannot grant that consent.
Suppose your child languishes in the hospital, and you try to participate in their care to the extent that you are able, their rent and bills may be going unpaid, leading to potential financial disaster if and when they regain their health. You can avoid this nightmare if your child executes a financial POA, a medical POA, and a HIPAA release (which grants you the right to receive their medical information). More on those documents in just a minute.
Protecting your adult children in case of emergency
Springfield, Massachusetts-based estate panning attorney, Hyman G. Darling, told me recently that when a child goes to college, he or she should complete a health care proxy or health care POA so if they become ill, the college’s medical personnel have the authority to discuss medical issues with the family. “Otherwise under privacy laws, parents are unable to access medical information to assist with any decisions that must be made, including the decision to be kept alive by mechanical means or not,” said Darling. “Similarly, the child should sign a financial power of attorney to allow their parents to attend to any financial decisions, including dealing with bank accounts, student loan documents, and all other financial matters,” noted Darling. If these documents are not in place, then Darling said parents may have to pursue a guardianship/conservatorship which is public, time consuming, and often costly.
A financial POA lets you conduct financial business and transactions on your child’s behalf. Like a medical power of attorney, a financial power of attorney can be “springing,” meaning it does not take effect unless and until it is necessary.
3 must-have documents for parents
Healthcare Proxy. This gives you the legal ability to communicate with medical professionals on behalf of your child if they are unable to do so. You may need more than one healthcare proxy if your child is attending college out of state, as there are state-specific versions of this document. For the child, a healthcare proxy ensures someone they trust can make decisions on their behalf if they have serious medical issues. From the parent’s perspective, you want to be able to be an active participant in your child’s healthcare issues if a serious event occurs.
HIPAA Release. Under HIPAA rules, once your child turns 18 you can no longer access their health records without written consent. HIPAA laws prevent you from even getting medical updates if your child cannot communicate their wishes to have you involved. A HIPAA release allows you to have access to your child’s medical records and to receive medical updates after they turn 18. Having this form in place is especially helpful if your child experienced an ongoing or sudden medical issue.
NOTE: You need both a HIPAA release and a healthcare proxy because a HIPAA release simply allows you to get information about your child’s medical status and records. A healthcare proxy enables you to make decisions on behalf of your child if they’re unable to do so.
Durable Power of Attorney. With a POA, you can access your child’s financial resources and sign legal documents for them, especially if they are out of the state or overseas. If you needed to resolve bills or other financial difficulties for them, a POA grants you access to their bank and credit card accounts. A durable POA is the preferred type of POA for your child as they get into their 20s and begin working full time, because it can be broad enough to handle most of your child’s potential situations and is effective immediately. Further, it continues even if the child were to become incapacitated.
Introducing your child to POAs
As with discussing the “birds and the bees” with adolescents, there’s no easy way to broach the subject of POAs with older teens and young adults. If you are still supporting your child, including with college tuition, you should not get much pushback. But the conversation might be harder with kids who are older and have had more freedom.
If parents don’t feel comfortable discussing POAs directly with their children, they can consider asking the family attorney or any other trusted person who has a good relationship with the child, said Darling, a shareholder of Bacon Wilson, P.C., which has five offices in New England. “Within these documents, the decisions include the right to be, or not to be, kept on life support, organ donations, and burial instructions including cremation,” Darling added.
Risks of not having a well-written POA
According to Darling, if you don’t have these documents in place, a court action may be necessary to obtain a decree from a judge who did not know the person, and “he or she is making life or death decisions over a person who did not clearly establish their intentions,” he warned.
Darling cited the historical decisions in the cases of Karen Quinlan, Nancy Cruzan and Terri Schiavo, all young women who did not specify their intentions clearly. Each case continued for years before the courts made a final decision. These matters were “very costly to the family, regardless of what the family wanted,” noted Darling. If the women’s intentions had been clearly specified, Darling said it’s likely the litigation wouldn’t have been necessary. “It was indeed unfortunate to continue with litigation while maintaining the incapacitated person on machines for years while multiple court proceedings were ongoing,” he added.
Conclusion
If you or someone close to you has concerns about protecting their young adult children, please don’t hesitate to reach out. We’ve helped many clients like you in similar situations.
