Books, iPad, laptop, lamp, microwave, what else does your college bound child need? They need two simple documents to protect them in case he or she suddenly becomes incapacitated.
It may be hard to think of your college bound child as an adult, but legally his medical information is protected, and it may be difficult or even illegal for medical providers to share information with you in case something happens to your child. When congress passed The Health Insurance Portability and Accountability Act in 1996 (HIPAA) one of their goals was to protect patient privacy. Because the penalties for violating the rule can be steep, doctors and hospital administrators are very cautious when releasing medical information. As a parent that can present a very frustrating and frightening situation in an hospital emergency room. Your child may not be in a position to give consent, and you don’t have time to go get a court order (an “emergency” action by the court could still take a week or more for a “temporary” order) not to mention the cost of filing fees and attorney assistance. To avoid all of that, your child (now adult) should prepare an Advance Health Care Directive to appoint the person they want to represent them if they are unable to speak for themselves.
The second document is called a Durable Power of Attorney, and it gives the appointed agent the ability to handle all financial matters. While most college age children don’t have a lot to manage, the Power of Attorney can be a good safeguard against the potential devastating impact of an event that leaves them incapacitated. It can save you thousands by avoiding the need to obtain a conservatorship of the estate. You may think, well, my child just has a small bank account, what is the big deal? The big deal is everything that is not in a bank account: handling insurance claims, lawsuits, lawyers, lenders, and the IRS. Your bank paperwork won’t help with any of those people – you’ll need a conservatorship or a power of attorney to act on your child’s behalf. So, in between all the notebooks and highlighters, slip two important legal documents. Welcome to the adult world, kid.
When most people create their estate plan they are just thinking about the point in time after they are gone. There is a lot that can happen to you personally before that point Specifically, people can face incapacity or diminished capacity – the ability to carry out life on a normal day to day basis.
I see this situation all the time, especially with elderly clients – their memory is slipping and their ability to process new information is limited because the short term memory just isn’t working.
The risk faced by adults is that in the event of incapacity, there is no one to act for them. What if you can’t – or shouldn’t – make decisions for yourself?
In extreme circumstances a conservatorship may be required. This is a lengthy, potentially expensive process where the court determines that the person is completely incapable of managing their personal affairs. The legal standard of proof is high, and may be impossible to meet in some cases.
The better alternative is to have a Power of Attorney and a Health Care Directive in place.
Making Financial Decisions – Power of Attorney
The Power of Attorney creates your own personal agent who can act in your place in financial matters. The powers granted can vary greatly in each document, and can be customized to meet the client’s exact wishes. This means that your designated agent can step up to assist you with all your finances at your direction.
Making Medical Decisions – Health Care Directive
The Health Care Directive gives the person you choose the ability to discuss your medical situation with your doctors and nurses, and make decisions regarding your care. This becomes extremely important when you cannot express your own wishes and desires. In fact, most hospitals now will present you with a very simplified version of a Health Care Directive when you are admitted.
Think of these documents as legal “insurance” for yourself. If something were to happen to you, these two documents allow the person you’ve designated to step into your shoes and continue paying the bills and making the important decisions that still need to be made.
Young adults typically don’t do any estate planning – after all, they usually don’t have an estate to worry about. Here is something parents and young adults should worry about.
When your child, now over age 18 goes to the doctor, current federal law limits a doctor’s ability to share any information with anyone other than the patient. A recent story highlights the potential for tragedy for families with this lack of information.
“Wolfe, who testified before the House subcommittee, lost his son, Justin, a Temple University student, in December 2012 to an accidental heroin overdose at the age of 21. At least two of Wolfe’s son’s three doctors were made aware of his heroin use. However, Wolfe and his son’s mother were not.”
“With the HIPAA regulations, if I would have known, and would have been apprised that he was doing heroin, a whole different strategy would have been proposed and mandated as far as him getting the proper care that he deserved and needed,” said Wolfe.
Until the legislature clarifies the rules, you can override these restrictions with a HIPPA release. You can also give specific directions in an Advance Health Care Directive.