What Documents Do Your Clients’ 18-Year-Old Children Need?

It’s never too early to get a jump start on estate planning for your clients and their kids. When the children turn 18 is an excellent starting point for estate planning for several reasons, both legal and practical.

First, it’s just generally good business to create a relationship with the next generation as early as possible. The main thrust of estate planning is shepherding assets to the next generation, but planners often neglect to actually interact with those to whom the wealth is going. This oversight can lead to distrust, which can scuttle the best laid plans and, on a more selfish note, increase the likelihood that the next generation takes their business elsewhere. It’s one thing for the kids to know you as “Dad’s advisor,” and often this knowledge is sufficient to build some level of trust, but by working with them and their parents to put certain documents in place when they turn 18, you can shift their perception of you from “Dad’s advisor” to “My advisor,” which can be a world of difference (in many cases, you may be the child’s first professional advisor in any capacity and in a strong position to build a lasting relationship).

Second, as noted by Florida attorney Joseph R. Karp in an interesting recent post on his blog, are privacy concerns. Though I’ve been referring to them as children, 18 year-olds are adults in the eyes of the law in most jurisdictions, and privacy laws intended to protect adults, like HIIPA, which limits the individuals to whom hospitals can release medical information, and FERPA, which restricts the information that a school can release about an adult student, can cause some complications for these “adults,” many of whom are still fully dependent on their folks both monetarily and emotionally. By having certain documents in place, the client and his child can create a compromise that still allows the child a degree of privacy protection under these laws while allowing the parent some leeway to intervene if needed in a physical or mental health emergency where the child may be unable to give consent.

Third, and most sobering, is that 18-year-olds aren’t immortal, even though many of them may think that they are. Accidents happen, and it’s best to be prepared.

So, what sorts of documents are we talking about?

1. Will. This one is fairly self-explanatory. Everyone should have a will, even if they have little or no assets to pass on. Intestacy can be an unpredictable (and wasteful) beast and you never know when the child may unexpectedly come into some assets and be thankful that these documents are already in place. Further, it’s often much easier to convince a client to update an existing will than it is to convince him to write a new one, so getting the bare bones set out early on in the relationship can help lubricate future planning decisions.
2. Health Care Power of Attorney. This document gives another individual authority to make medical decisions for the child if he’s somehow incapacitated. It’s probably the most important of the three, at least at 18. Now, convincing the child to sign this particular document is a story for another article, but the usual methods of convincing kids to do things they don’t want to (aka, rewards or punishments, depending on the child) largely apply.
3. Property Power of Attorney. Even though most 18-year-olds don’t have much in the way of personal assets, it’s still helpful to have this document in place so that someone can help a child manage his finances if, for some, reason, he can’t do so himself. This document acts largely in concert with the Health Care Power of Attorney and will come into play in many of the same situations, but can also be useful by itself in some (admittedly corner case) scenarios.

It’s never too early to start estate planning, and these documents can provide a solid base at only 18 years of age.