In last week’s blog post, I celebrated my eldest son’s 18th birthday, even as I nursed a twinge of regret (okay, more than a twinge) over the end of his childhood. While our children may remain financially dependent well beyond their teen-age years, they are legally independent once they turn the age of majority. In New Jersey, New York, Connecticut, Pennsylvania and Florida, that’s 18. As your adult children enter the world of college and career, there may be no better gift you can give them – and yourself – than solid estate planning documents already in place.
That’s why it’s important to have a discussion with your adult child during normal times. Explain the benefits of executing these important documents and legally naming you (their parents) to make financial and medical decisions if they are unable to do so. Once your adult children are ready to do their own planning, they can designate their own decision-makers.
Overall Estate Planning (Wills and Trusts)
How do you get started? First, evaluate your own estate planning. Are your own plans in place? Do they need to be updated or reviewed? If so, this would be a good time to contact an estate-planning attorney to discuss your own as well as your child’s planning needs in unison. Costs can vary, but expect stand-alone child’s document preparation to cost in the range of a few hundred dollars. While you can purchase estate-planning software and do it yourself, we recommend working with an estate-planning attorney to ensure that the plan fits your needs and conforms to all current laws in your state.
Advance Medical Directive
Many states have now combined the health care power of attorney and living will documents into the advance medical directive. The advance medical directive appoints a health care proxy, which is a fancy name for the individual who will make decisions about your health care if you are unable to make decisions on your own. The document also contains instructions on what you want to happen should you require artificial life support.
Durable Power of Attorney
A power of attorney names a person who can make decisions about your money and property if you are unable to make them yourself. In many states, a power of attorney document becomes invalid if you become incompetent or incapacitated – which is exactly when you need someone to make decisions on your behalf. A durable power of attorney, however, remains valid should you become incompetent or incapacitated.
Similar to a will and an advance medical directive, a durable power of attorney can be composed without a lawyer, but minutiae such as how the document needs to be recorded or notarized could result in it being invalid when put into use. Again, we recommend working with an estate-planning attorney.
Life’s Risks and Rewards
In pondering the vagaries of our stock markets, Santa Clara University Professor of Finance Meir Statman once quipped, “The real risks in life are not the stock market. If you want risk, get married. And if you want more risk have children.” (Source: Jeff Benjamin, “Meir Statman on perils of markets: ‘If you want real risk, get married’” InvestmentNews, April 29, 2013)
Truer words were never spoken. To manage the risks that matter the most, start with solid estate planning for you and your family, and be sure to keep it current as your children mature into adulthood.
SAGE Serendipity: Take that, Florida. New Jersey tops them all in Money magazine’s Best Places to Live 2013 list. Let’s hope that will convince Dominic to pick a college close to home.