As of your 18th birthday, you became an adult in the eyes of the law.
Even though your kids may still act like teenagers (or you may feel like one), in the eyes of the government, turning 18 means you need to have legal documents in place in case of an accident.
Every adult should have in place an Advance Health Care Directive and a Financial Durable Power of Attorney. Estate planning is not just for rich people. These legal documents are important for everyone who loves their family.
If you don’t have these legal documents in place and something scary happens, it will make life a whole lot more difficult for the people you love.
An Advance Health Care Directive (also known as a living will) does two things: first, it names the person you want making health care decisions for you if you cannot make them for yourself and second, it lets that person know how you want them to be made.
This is important because if you are in the hospital and cannot communicate, you need someone to make decisions for you and you want them to make those decisions as you would want them made, without question.
If you don’t have this document in place, it could create a huge rift among your family as the people you love fight about what you would have wanted.
The important thing in this document is that the whoever you name is also given authority under the new (within the past three years) Health Insurance Portability and Accountability Act (aka HIPAA).
If your health care agent (the person named in your Advance Health Care Directive) is not designated as your agent under HIPAA, they will not be able to look at your medical records, which makes it mighty hard for them to make health care decisions for you.
By the way, if you have college age kids going off to college, you’ll want to get this in place for your kid. Otherwise, when you call the school nurse to discuss your child’s illness, you may find no one can or will talk with you because they would violate HIPAA if they did.
We get frantic calls in our office at least once or twice each fall from parents looking for legal documents for their college-age kid for just this reason.
The second legal document you absolutely need to have in place as an adult is a Durable Power of Attorney. This document names someone to make financial and legal decisions for you if you can’t make them for yourself.
Beware of the one-page standard durable power of attorney you find on the internet where you just check off a list of applicable powers. I’ve seen family members try to use those to access their loved ones assets and then not be able to because the form was too generic.
It’s important for your kids going off to college to have this in place too because if they are in an accident you are going to need to take over paying the bills and get access to bank accounts and make legal decisions. But, you will have to go through a long and expensive court process if there’s not a signed Durable Power of Attorney in place.
It’s the same for you too. If you are in an accident, and you don’t have a Durable Power of Attorney in place,it will be difficult for your family to deal with things on your behalf.
So, regardless of the amount of money you have in the bank, get your Advance Health Care Directive (or living will) and your Durable Power of Attorney in place at the bare minimum. Oh, and of course, if you have kids under 18 at home, get your comprehensive Kids Protection Plan in place too.
None of this has to do with money. It has to do with making life as easy as possible for the people you love.