There are plenty of milestone birthdays for your children – when they officially become a teenager at 13, their sweet 16 – but none of them have quite the same weight, both emotionally and practically, as when your child turns 18, at least here in the U.S. When they turn 18, your child is officially (at least legally) an adult, and with it comes a host of practical, legal concerns. It’s also a time of major transitions as your child becomes more independent and can open up an opportunity to discuss the family wealth in new ways with your now-adult child and deepen their connection with your family values and the legacy you hope to leave.
The Emotional and Family Considerations
Turning 18 can mark the beginning of a big shift in your relationship with your newly-adult child. They have more ability to make decisions on their own, and there are typically big shifts in their life beyond just a birthday, like going away to college, taking a gap year traveling abroad, or entering the work force. As your family looks ahead to these changes, having frequent, open conversations is the best way to navigate a changing relationship with your child.
Think about both the practical questions, like what parts of your child’s life you’ll be funding and for how long, and the more philosophical or emotional questions of family legacy and values. Start by setting expectations early and revisiting them often to keep pace with the changes in your child’s life.
Some discussions to start with:
- What funding can your child expect from you and for how long?
- If you’re covering living expenses, for how long and at what level? E.g. covering car, insurance, gas and clothing while your child lives at home vs. covering rent and utilities in an apartment; covering rent in first apartment after college graduation for a set period of six months.
- If your child is attending college, how is tuition being paid?
- What’s the plan for the next five years? What about the next 10?
- If your child is attending college, how long do you expect them to stay in school (e.g. through undergrad, through graduate school)? What do you expect from them as far as grades and extracurriculars or work outside of school? What help can they expect from you after graduation, financially and otherwise?If your child is taking a gap year to travel or volunteer or is starting a business in lieu of college, what do they see as their future plan, and what are your expectations? Is college next after time volunteering? Are they going to try their entrepreneurial dream for a certain period of time and then consider college if it’s not working out? If you will be funding their business, do you need to formalize terms such as business plan expectations, external fundraising, etc.?
- What are your plans for your own life over that time, and how might that impact your child? Are you looking at retirement, selling the family home, selling the family business, or other significant changes?
This is also an important time to talk with your child about your family values around wealth and what responsibilities may be coming to your child. What do you want the legacy of the family and your wealth to be? What kind of assets may your child be responsible for stewarding in the future? Start the conversations early so that they can build over time and your child feels prepared as they get older and begin to take on more responsibility for the family wealth.
The Legal and Practical Considerations
Becoming a legal adult has a host of ramifications because, most importantly, you are no longer their legal guardian. The level of involvement and access you may be used to having in your child’s decisions, particularly concerning healthcare or their finances, can no longer be taken for granted. By putting in place some legal protections now, you can avoid potential difficulties later if your child wants or needs your assistance.
Healthcare
Particularly because of the stringent privacy standards that healthcare providers operate under, once your child turns 18, you will no longer have default access to their medical records or be able to make healthcare decisions on their behalf.
A HIPAA release will likely be your most immediate concern after your child’s birthday. Legally, your family doctor and other healthcare providers you may already know and have a relationship with cannot disclose medical information, including test results and treatment updates, without a valid HIPAA release on file allowing it. Privacy requirements vary slightly from state to state, but your doctor’s office or family law attorney can typically provide you with the necessary documentation to fill out for your state. Once the form is filled out, submit it to any existing providers and keep a copy for your records.
One thing to note is that you must include a date or event to trigger the expiration of the release. You can either choose a specific date, such as your child’s 21st birthday, or you can include phrasing to indicate a to be determined date at which time the release should expire, like upon your child graduating college or use language like “upon my written revocation of this release” to leave the release active indefinitely.
While a HIPAA release allows you to get information about your child’s medical care, it does not grant the right to make decisions on their behalf. A healthcare Power of Attorney (POA), sometimes called a healthcare proxy,allows your child to appoint who they would like to make medical decisions on their behalf and under what conditions.
As next of kin, you would likely be who a medical provider would look to in order to make decisions if your child was incapacitated, but a healthcare POA offers more comprehensive and flexible protections. In addition to appointing who can make medical decisions for your child, a healthcare POA combined with an advanced directive can also specify what kind of treatment your child may want and under what circumstances. This may be particularly important if you have a child with a chronic illness or other complex medical needs who may have specific wishes about their treatment.
It’s also important to note that your child can name anyone to make decisions for them under a healthcare POA. This responsibility often falls to a parent but does not necessarily have to, and you and your child and other loved ones should consider who would be the best choice in that situation. For example, if your child has another close family member who is a medical professional, naming them in their healthcare POA and letting parents simply be parents in the event of an emergency, unburdened by having to make potentially difficult medical decisions, may be the right choice for your family.
Healthcare POAs (and advanced directives) can vary by state and must be notarized to be valid, so it’s worth coordinating with your estate or family law attorney to ensure the instrument will be valid in the locations and in the ways you wish.
Finances
This is an important time to discuss with your child how involved you expect to be in their finances, how much and what kind of help they’d like to get in managing their finances, and any expectations you have around issues like budgeting. This is also a good opportunity to discuss with your child any assets they may gain access to when they turn 18. Each family’s needs and preferences will understandably be different.
You may feel comfortable having access to only one or two shared accounts with your child and trusting them to handle their finances on their own beyond that. Or you may feel more comfortable having complete access to and involvement in your child’s finances, or somewhere in between, depending on many factors including their temperament and their living situation and plans for the immediate future. With your child’s authorization, you may also view their portfolio via the LNW client portal as a way to ease the hand-off of managing their own finances.
For any existing bank or brokerage accounts that your child may have, you may or may not retain access to them once your child turns 18, depending on the account and how it was originally set up. Typically if there are, for example, savings accounts that were established by you or family members before your child turned 18 or a checking account that you helped your child open to hold on to money from their first summer job in high school, both an adult family member’s name and your child’s name are likely on the account, and both parties will likely retain access after your child’s 18th birthday. It’s a good idea to confirm with your bank, but most likely those accounts will not be affected by your child becoming an adult. A handful of states consider 18 the age of majority to convert a custodial account (e.g. UTMA, UGMA) into an individual account.
The slightly more complicated question to tackle is what to do with any accounts that are only in your child’s name that you may need or want access to. A durable Power of Attorney (POA) will allow you access to your child’s finances and is broadly applicable and would also give you the right to do things like file taxes on your child’s behalf. A durable POA that takes effect if your child is incapacitated is a necessary tool to prepare for emergencies, the same way it is in your own estate plan. If your child has significant assets solely in their name, now is also a good time to discuss how your family would want those assets to be distributed in the hopefully unlikely event that your child was to pass.
If your child needs more ongoing help with their finances, a durable POA that goes into effect immediately can allow you the necessary access to provide that help. While a durable POA as a document should be recognized by any bank or financial entity, some banks prefer their own version. Reaching out to the bank or banks you know you have accounts with and finding out if they have their preferred form may avoid some headaches if they were to balk at a generic document.
Bear in mind that there are many options for you to provide guidance and support to your child in managing their finances as they move into adulthood, and the important first step is to have a discussion with your child about their needs and plans and for you to set expectations.
Educational Records
If your child is heading to college, you will not be granted access to their grades and other academic records by default. Discuss with your child how much information you want to be given and what your expectations are for their grades and general academic progress. If you feel it’s appropriate and necessary to have direct access to your child’s grades, reach out to the school registrar and they can explain their process for releasing records.
Conclusion
Turning 18 is a major milestone and is also just the beginning of a period of lots of change for your child. Putting plans in place so that you can support them as needed and are prepared in case of an emergency can help alleviate some stress on you both, and having frequent, frank discussions about your family values and your expectations can help you maintain a loving and open relationship with your child as they move into adulthood.
