Q. My daughter is 18 and just went off to college this fall. A friend of hers asked her whether she had prepared a will before leaving and if not, she told her she should get one. The friend’s father is an attorney, so we figure he thinks everyone should have a will. Do you see any need for a young adult to have a will?
A. You may want to consult with a practicing attorney, but I agree with your daughter’s friend. More important than a will are some of the routine legal documents that are generated when a will is prepared. These documents can also be prepared without a will. Once a child reaches age of majority, which is 18 in most states, including North Carolina, her parents are no longer entitled to see her medical and financial records or make decisions on her behalf. I think the most important document to have in place would be an Advanced Health Care Directive. Once your “child” is viewed as an adult, if you don’t have legal authorization to see her medical records or participate in health care decisions, you may not be able to obtain basic information about her condition, see medical records or make decisions about care for her. Without legal authorization, if your daughter is in an accident, unconscious or in any condition where she can’t convey her desire to authorize you to act on her behalf, you may need to petition the court to become her temporary legal guardian. This can take precious time, cause frustration and result in unneeded costs.
Advance Health Care Directives are legal documents allowing a person to appoint a trusted friend or relative to serve as a health care proxy. This person would have the authority to make health care decisions in the event the patient is unable to do so. The document should also comply with HIPAA, the Health Insurance Portability and Accountability Act, allowing the release of medical information to the person named as health care proxy. A sample document can be found online here: www.ncmedsoc.org/non_members/public_resources/hcpowerofattorney2007.pdf
You can file this paperwork with the N.C. Secretary of State, but you are not required to. More information about filing paperwork with the state can be found here: www.secretary.state.nc.us/ahcdr/faQ.aspx
Another important document is either a springing or a general financial power of attorney. A springing financial power of attorney will allow a designated person to access financial accounts if the account holder is declared incompetent. A general financial power of attorney allows the designated person to access financial accounts at any time. It should also be a durable power of attorney, stating that it does not become void if your daughter becomes incapacitated. A general power may be very useful while your daughter is in college. If she studies abroad or is in another state, this will allow you to monitor accounts, pay bills, replace cards and speak on her behalf concerning financial matters. These need to be updated every few years, or they may not be recognized by financial institutions.
If a young adult has items he or she wants to leave to certain people, a will would be useful. If a person dies without a will, state law determines the distribution of assets.
Finally, a clarification with regard to my column last week about rising health care premiums: I noted in the column that it was suggested to me that I get a new policy beginning Dec. 1, 2013, and once approved, cancel my current policy. If you hold a current policy and your existing insurer will not allow you to apply for a new policy effective Dec. 1, 2013, you may need to contact another insurance company to get a policy in force by Dec. 1. Never cancel coverage until you are approved in writing for a new policy, and only cancel as of the effective date of the new policy.
Holly Nicholson is a certified financial planner in Raleigh. She cannot answer every question. Reach her at askholly.com or P.O. Box 97128, Raleigh, NC 27624