How a power of attorney can protect your children after they turn 18
There is typically great joy when your son or daughter reaches their 18th birthday and becomes a legal adult.
While it often means celebrating the start of college or a new career, it also means parents have lost any legal authority to make medical and financial decisions for their adult child.
Unfortunately, this is often overlooked until some incident arises where a bank, credit card company, or doctor tells the parents that no confidential information about the child can be shared with the parents.
Having your son or daughter sign “power-of-attorney” forms is a simple way to protect your child. These documents let your child appoint you or someone else to act on your child’s behalf if the child is unable to act or make decisions for any reason.
If your adult child becomes incapacitated and has not signed power-of-attorney documents, state law generally requires that a family member or other interested person petition the circuit court in the county where the child resides to be appointed as a guardian. This can be a very lengthy and expensive court process to appoint a legal guardian to make financial and health care decisions for the child.
There are generally more restrictions placed on a court-appointed guardian for financial matters compared to the flexibility of a person acting under a financial power of attorney. For example, a guardian may not be able to sell real estate without court approval.
In addition, a court-appointed guardian may be required to file a financial report with the court every year regarding the child’s income and expenses (which may be put into a public record in some states). Finally, state law may limit the ability of the guardian to withhold or withdraw feeding tubes or other life support if there is no clear evidence regarding the child’s desires related to end-of-life decisions.
In most states, there are two distinct types of power-of-attorney documents:
- A durable financial power of attorney for financial decisions.
- A health care power of attorney for health care and end-of-life decisions.
To avoid the court appointing a guardian, both documents are required.
Durable financial power of attorney
A durable financial power of attorney grants an agent (you or someone else) the authority to act on your child’s behalf for financial matters. If your child becomes incapacitated, the agent will have the legal authority to pay bills, sign checks, make investment decisions, etc. for the child. The term “durable” simply means the agent has authority to act even though the child is incapacitated.
Health care power of attorney
A health care power of attorney (in some states it is known as an advanced health care directive) grants an agent the authority to act on your child’s behalf to make health and medical decisions if your child becomes incapacitated.
The health care power of attorney typically grants authority to the agent to have access to your child’s medical records and make any medical decision needed on your child’s behalf, including the withholding or withdrawal of feeding tubes and other life support. The health care power of attorney may also grant authority to admit your child to a nursing home or community-based residential facility if care outside of the home is needed, as well as state your child’s wishes with regard to donating organs.
Many individuals also have a “Declaration to Physicians” (also known as a “Living Will”), which directs the withholding or withdrawal of feeding tubes. Note that this document is not the same as a health care power of attorney, as authority under a Declaration to Physicians is only limited to the withholding or withdrawal of feeding tubes and other life support. If your child has a Declaration to Physicians, but not a health care power of attorney, no agent has authority to make day-to-day medical decisions on your child’s behalf, and court guardianship may still be required.
Most states have standard financial and health care power of attorney forms that are relatively simple to complete on your own. Of course, you should always consult an attorney with any legal questions you may have about these forms.
Two helpful forms for Wisconsin residents are Wisconsin’s Power of Attorney for Finance and Property form and Wisconsin’s Health Care Power of Attorney form.
What about a will?
Some readers may be wondering about wills for their children. Power-of-attorney forms are likely more critical than the child having a will. Most young adults turning age 18 own few assets. Under state probate laws, assuming the child is not married and has no children, any assets of a deceased child will likely pass to his or her parents who survive.
Having your child complete these forms authorizing you to make medical and financial decisions on your child’s behalf might be the difference between continuing to help your child when a medical or financial issue arises and being locked out of any communication about your child when needed most. By taking these steps, you’ll have peace of mind in knowing that your child is well prepared for both the expected and the unexpected, as they make the transition into adulthood.
Dean T. Stange, JD, CFP, is a principal and senior financial advisor at Wipfli Financial Advisors LLC.
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