The first day of college is the first day of adulthood for many students and their parents. As college freshmen begin living on their own, choosing their majors, and managing their own time, they are also starting to design their futures. However, this design for the future almost never includes a plan for what would happen in the event of a mental or physical incapacity or death.
Estate planning and its essential components are rarely discussed with young people, as planning for end-of-life care at such a young age is often seen as morbid or unnecessary. While these thoughts are understandable, it is important for young adults to be informed about all of their options and to feel prepared for what could happen.
Last Will and Testament
A basic estate plan is composed of a Last Will and Testament, Advance Medical Directive, and Power of Attorney. Most college students never consider establishing a Last Will and Testament because they are unmarried, do not have children, and do not believe they have anything of value to leave behind. While this may be true, they often forget about their other valuable assets, such as cars, bank accounts, smartphones/computers, digital media, and even social media accounts and passwords.
If an individual dies intestate (without a will), their money and other possessions are divided and distributed according to intestacy laws that may not reflect their wishes. For example, these laws distribute all property to close relatives, completely excluding distant relatives and friends. This can be unfortunate if the individual does not have a close relationship with their immediate family and would have preferred for their friends to be beneficiaries instead.
For medical decisions, an Advance Directive ensures that an individual’s wishes are carried out even if they are unable to make and communicate their healthcare choices. Advance Directives can name a person to carry out the patient’s wishes, establish the types of treatments they want in different situations, and safeguard family members from having to make heartbreaking choices.
While some college students may trust that their parents would be able to make the best medical decisions on their behalf, it is important to understand that parents lose the right to make these decisions and access their child’s healthcare records after they turn eighteen. In addition, the Health Insurance Portability and Accountability Act of 1996 (HIPAA) prohibits the sharing of healthcare information to unauthorized persons. Therefore, it is necessary to establish a healthcare plan and name a healthcare agent ahead of time as the situation can be extremely complicated and distressing.
Power of Attorney
Finally, a power of attorney allows an individual, known as the “principal,” to assign an agent to manage their legal and financial affairs if they are unable to do so. A power of attorney maintains the principal’s power to act and defines the limits of the power given to the agent. For college students, a power of attorney can be beneficial if they would like their parents or guardians to assist them with banking, taking out loans, entering into a contract, or any other legal or financial matter while they are away at college or even studying abroad.