Normally, one thinks of healthcare and financial powers of attorney as something “older people” need.  However, as a 2014 Forbes article states, children turning 18 also need to sign these two documents before they leave home – or even if they stay home.

What most parents don’t know is that once a child turns 18, the parents have no access to the medical and financial records of that child – now officially an adult – even if parents are paying for their new adult’s healthcare insurance and/or funding those bank accounts. 

This lack of access can be a nightmare in a healthcare emergency when parents don’t have access to all of the new adult’s medical records to help direct the doctors.  While financial concerns are not usually as time sensitive, there may be times when the new adult would want someone else to act on their behalf such as renewing a car registration, signing a lease in their absence, or accessing a bank account.

In addition to these documents, the new adult also needs a living will to address end of life decisions.  And while they are at it, if the new adult wants to leave any assets owned now – or assets that may be acquired prior to getting around to changing their will – to someone specific, a will is needed as well.  Without a will in place, any assets pass according to state intestacy laws which can be complicated.

If you or someone you know could benefit from these documents, please feel free to share this article or give them my information.

It is imperative that parents with minor children have estate plans. At a bare minimum,

parents need to name healthcare surrogates to make medical decisions for their children until the

parents can get to the hospital, and parents also need to name guardians for their children if the

parents are both gone. Parents should also consider including a Revocable Trust as part of their

estate plan.

So what is it about having children that makes a Revocable Trust a good solution if

parents die earlier than they would like?

The first reason is that without a Revocable Trust, the child generally has full access to

all of the inherited funds at age 18. How many 18-year-olds do you know that would spend a

lump sum inheritance wisely? With a Revocable Trust, parents can protect the child against

extravagant spending sprees that often occur if a child inherits funds at a young age. With a

Revocable Trust, parents can provide financially for their child while placing limitations on lump

sum distributions. These limitations could include the child reaching a certain age(s) or reaching

a certain milestone(s) that the parents believe indicate the child’s readiness to make responsible

decisions.

Additionally, if parents do not have a properly funded Revocable Trust, a probate will be

needed to transfer the parents’ assets to the child. If a minor receives an inheritance of more than

$15,000 through probate, Florida law requires that a court appoint a financial guardian to look

after the assets for the child. The financial guardian is in place until the child is 18 and must file

detailed reports with the court every year – a time-consuming, and sometimes costly, burden.

And again, the child receives the remainder of the assets upon turning 18.

While a Revocable Trust does not protect the assets of the person who creates it from that

person’s creditors, when done correctly, a Revocable Trust can protect the assets held in that

trust from some of the child’s creditors and a child’s angry spouse.

Finally, a Revocable Trust can also be set up to limit the distribution of funds in the

unfortunate case of a child having a substance abuse problem.

For all of these reasons, parents should think carefully about using a Revocable Trust to

protect their child after the parents are gone. Even if parents do not choose to set up a Revocable

Trust, they should at least have papers designating a healthcare surrogate and guardian for their

child.

If you know someone who could benefit from a Revocable Trust and other estate

planning documents, please share this article with them.

Lorien Smith Johnson, Esq.

Estate Planning and Probate Attorney

LSJohnson@LorienSJohnson.com