How one family works together to enable higher education
The use of financial planning, transparency and resources to manage university costs is important.
“Happy 18th birthday, kid! Sign these forms now.”
A birthday party may not be the right moment to broach this issue. However, some time after your child is 18, experts say they need to present a stack of legal and financial documents to sign.
They are still your children. But when they turn 18, they are also adults. And that means that most of their lives are not accessible, at least without their consent.
Your child may head to college this fall. That life change raises a whole new set of potential legal barriers between you and your child.
There is a good chance that your adult child doesn’t want to sign you to their new freedom. Still, experts say you should make an effort. Try printing the form, sitting together and talking to them to sign. I’ll thank myself later. Maybe they will too.
Here are five documents when a child turns 18.
FERPA authorised
The Federal Education Rights and Privacy Act governs access to your child’s education records. When they turn 18, you don’t know most of them without the consent of your child.
FERPA has stopped access to basic information from institutions where many parents are cashing their tuition checks, experts say.
“Even if you’re paying 100% of your child’s education, you don’t have the right to see their transcripts to check for tuition fees,” said Leila Francis, national head of BMO Wealth Management’s Trustee Advisory Services.
Signed FERPA forms allow parents to access all educational documents that the school can use freely, including tuition fees and transcripts.
Without that, you might bind an adult child to go online and deal with complaints of forms, fines and financial aid.
“This will still allow parents to access financial data, performance, schedules and things like that. Importantly, says Ben Rizzuto, wealth strategist at Janus Henderson Investors.
“To be honest, I’m still putting up a large portion of the bill here,” he said. “I have skin in the game, so it’s important for me and other parents to know what’s going on.”
HIPAA authorised
The Portability and Accountability Act of Health Insurance Prohibits health care providers from sharing most medical records with fraudulent people. After your child’s 18th birthday, it means you.
“It’s counterintuitive, but when a child turns 18, parents are not entitled to automatically receive medical information about their child,” says Bobpetics, a senior wealth strategist at Wells Fargo Bank.
The HIPAA release allows parents to access basic information about adult children if they are hospitalized. Though it may be difficult to contemplate, many students are admitted to hospitals or mental health facilities at some point in their college careers.
“Severe things can happen,” Francis said. “Parents definitely have no right to information.”
Pre-order health care instructions
The document “dos two things,” explains Wells Fargo in his primer on legal documents for adults and children. “It appoints agents who can make medical decisions on your child’s behalf when the child is unable to do so, and gives them instructions for care they want to receive in different circumstances.”
Pre-healthcare directives will not be effective unless your adult child is able to make their own decisions. That’s an unlikely scenario, but it’s not impossible.
“Parents don’t want to think that their child is incapacitated or dying, but unfortunately these things happen,” Rizuto said.
The power of a lawyer
The power of lawyers allows you to make decisions and access records on behalf of an adult child. The attorney’s financial strength covers financial records and decisions, while the medical strength of the power of attorney grants access to medical records and decisions.
(The HIPAA release provides access to medical records, but does not allow medical decisions to be made for adults.)
If your child has assets, the financial strength of a lawyer is even more important.
“They were able to own a bank account,” Petix said. “They were able to own an investment account. The ability to name someone who acts on your behalf with regard to your finances is insignificant.”
Simple will
Probate experts say that every adult should have a will.
An 18-year-old may not need will, but documents become important if they have assets to hand over to someone else when they die.
“Does an 18-year-old need a will? Unless you have important assets,” Francis said. “But as they come out, they start building their assets.”
If someone dies without a will, the local court will take over. And probate laws vary depending on the situation.
“If you die without will, the property you own in your name will pass under state law,” Petix said. “And that may not match your wishes.”
How to get your child to sign a form
There’s a difficult part right now. How to convince your 18 year old to sign a form that empowers you no matter their lives.
Children are pleased to have officially entered adulthood and are gaining a measure of freedom from their parents. Convincing them to return some of them is a big question. How do you start a conversation?
One approach is to communicate new adult children that these documents are rites of passage to adults.
Rizzuto says that parents “This is what adults do. We’re not trying to be helicopter parents. We’re trying to make sure you’re set up to become an adult and successful.”
On her 18th birthday, Francis said, “There was a stack of foam underneath the balloons and I sat with my daughter at the dining room table. We made it a big signing ceremony,” she said.
“This is not control,” Francis told her. “It’s about helping you.”
Her daughter signed the form.
