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December 11 2008

Adult Children Need Estate Planning Documents Too

By Neil L. Kimball

It often does not occur to parents that when their children turn age 18, they are no longer minors under Michigan law. Once a child reaches 18, he or she has legal independence from parents and the ability to enter into contracts and execute other documents including estate planning documents. Although most 18 year olds have not yet accumulated substantial assets, they should execute certain basic estate planning documents.

Your children should execute a general Durable Power of Attorney to authorize one or more individuals to handle all types of financial transactions for them. Although this document can be written so that it is effective when it is signed, it is most needed if a child becomes incapacitated as a result of an accident or illness, even for a short period of time. Under those circumstances and without a Durable Power of Attorney, financial transactions may have to wait until a conservator has been appointed through a probate court proceeding. These proceedings certainly come at a time when it is difficult on the family and a General Durable Power of Attorney will almost always avoid the necessity of a probate court conservatorship proceeding.

Similarly, your children should have a Designation of Patient Advocate in which they can name an individual to make medical decisions at such time as their physicians determine that they can no longer make informed decisions about their own medical care. The Patient Advocate then can make those medical decisions for the child under those circumstances. Without this document, a probate court guardianship proceeding may be necessary. These Designations of Patient Advocate can also include a "living will" statement that indicates what treatment your son or daughter may or may not want under particular circumstances. In light of the recent case involving Terri Schiavo, all adults should consider executing one of these documents to make their wishes clear and help avoid disputes over their medical care.

Under the statute on Designations of Patient Advocate, the Patient Advocate appointed under the document has no authority to act until two physicians or a physician and a licensed psychologist determine that the patient is unable to make their own informed decisions about his or her own care. Situations can arise in which your child may not have reached that stage but needs help dealing with physicians, hospitals and medical insurance providers. For this "in between" stage, the fact that as a parent you may be providing the health insurance coverage for your child does not allow you to have access to his or her medical information and insurance information which is protected under the Health Insurance Portability and Accountability Act ("HIPAA"). As a result, it would be prudent for your child to execute a separate authorization under this HIPAA legislation authorizing you or another trusted individual to receive this protected information and be able to deal with physicians, hospitals, and health insurance providers.

Finally, your children should consider having a Will or even a Trust, depending upon their financial circumstances, to specify how they would want their assets distributed in the event of death.

Parents who are sending their children off to college or to military service often forget that although their children may be financially dependent upon them, they are legally independent and need to address these issues to avoid a great deal of confusion, expense and emotional turmoil. Estate planning is one of the many tasks that your children should address as they reach adulthood.