Why Young Adult Children Need A Power of Attorney

By: Jennifer Kawicki, Trust Counsel, Commerce Trust Company
June 21, 2021

It’s a hard truth to face: Your 18-year-old is now an adult, at least in the eyes of the law. While your son or daughter will always be your child, your legal responsibilities as his or her parent ended when this important birthday popped up on the calendar. Once our children reach this milestone, they’re immediately thrust into adulthood with all the privileges that come with making – along with the consequences of facing – their own decisions. They can now vote, enter into legally binding contracts, and get married without your permission.

Power of Attorney
Whether your young adult is headed off to college, starting a full-time job, joining the military, or taking some time off to figure out what the future holds, it will be the beginning of a new journey filled with different responsibilities, freedoms, and experiences. It’s understandable that as a loving, caring parent you still want to control some aspects of your child’s life. But legally, you have no say over his or her financial (or medical) health. Your child may also want to be able look to you to assist or handle certain matters while they take the next steps into their future. A durable power of attorney can help.

Why Your Adult Child Needs a Power of Attorney

While discussing financial issues with young adults can be challenging, it’s worth every effort to have this important talk at the appropriate time. Here are a few considerations that may help with the conversation.

THE ADVANTAGES OF A CHILD DESIGNATING A PARENT AS ‘AGENT’
With a valid durable power of attorney for finances in which a parent has been designated as the agent, you can take any legal action assigned and permitted by your son or daughter in the document. Keep in mind, it’s not uncommon for a designated agent to have to present the actual document in a transaction to invoke your power. This is generally to ensure that proper authority has been granted for the agent to undertake the action in question since a durable power of attorney can be either narrowly tailored or grant broad
authority.

For example, if your son wants to sell his car that’s been sitting in your garage for months while he’s attending college in another state, your state’s motor vehicles department generally will require that you present the power of attorney before your authority to sign the title will be honored. Or, if your daughter wants to buy or sell a piece of real estate and she’s living and working overseas, you would be asked to present the power of attorney verifying your authority to act on her behalf in order for the title company to validate and proceed with the transaction. It’s also the case if you’re opening or closing bank accounts or selling securities on behalf of an adult child. However, an agent generally does not need to present the power of attorney when signing checks.

Let’s say your daughter is studying abroad. Having a durable power of attorney for finances appointing you as the agent would allow you to handle the necessary financial paperwork from here on her behalf or access her bank account in an emergency to pay her bills or renew insurance coverage.

Additionally, if you are a parent of a person with a disability, being able to act as an agent might help with monitoring and assisting that person in making choices. However, a person with disabilities must understand the details and impact of the power of attorney document and be competent to sign it.

Bottom line, even though a power of attorney gives parents (as agents) the authority to execute transactions on their children’s behalf, any and all decisions and actions must be made according to the wishes of the children. You as the agent cannot substitute your will for theirs.

OTHER IMPORTANT DOCUMENTS FOR YOUR ADULT CHILD TO CONSIDER
After you talk with your child about authorizing you as his or her agent regarding financial matters, you also should discuss other important legal authorizations which often accompany a durable power of attorney for finances:
  • Durable power of attorney for health care. With this legal document, the agent has the authority to receive medical information and make medical decisions if a child becomes incapacitated as a result of an accident or medical emergency.
  • HIPAA privacy authorization. A signed HIPAA authorization form authorizes medical care providers to disclose your child’s protected health information to the agent. Without it, health care providers are legally prohibited from sharing information, even with family members and even if they are covered under your health insurance.
  • Health care directive. Sometimes referred to as a living will, this directive allows your child to specify his or her wishes regarding medical treatments used to prolong life and organ donor preferences in case of an emergency or serious health condition.

NEXT STEPS
With each of the legal documents mentioned, it’s best to consult with your family’s legal counsel and have an attorney draft the documents as this will ensure they are tailored to best meet your child’s needs. However, if time doesn’t allow for this to take place, certain documents may be available as fillable forms on your state or local bar association website. If you choose to go this route, it is recommended that you use this as a stop-gap measure only and have the documents reviewed and updated by your attorney at the earliest possible convenience.

Contact Commerce Trust Company today for more information or if you have questions about these important documents. We will answer your questions and help you determine and implement the best solutions for your family’s unique situation.

The opinions and other information in the commentary are provided as of June 22, 2021. This summary is intended to provide general information only, and may be of value to the reader and audience.

This material is not a recommendation of any particular investment or insurance strategy, is not based on any particular financial situation or need, and is not intended to replace the advice of a qualified tax advisor or investment professional. While Commerce may provide information or express opinions from time to time, such information or opinions are subject to change, are not offered as professional tax, insurance or legal advice, and may not be relied on as such.

Data contained herein from third-party providers is obtained from what are considered reliable sources. However, its accuracy, completeness or reliability cannot be guaranteed.

Commerce Trust Company is a division of Commerce Bank.
NOT FDIC INSURED | MAY LOSE VALUE | NO BANK GUARANTEE

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