Preparing for the Empty Nest: How College-Bound Children Impact Estate Planning

Introduction:

Sending children to college is a significant milestone for both parents and children. As part of this transition, parents should consider updating their estate plans to reflect the changing circumstances and ensure their wishes are appropriately addressed. Believe it or not, they should also consider estate planning for their kids!

Here are some estate planning-related topics that parents should consider when their kids leave for college:

Estate Planning for My Adult (18+) Children

While it is hard to believe, at 18 years old, your child is officially an adult, and you can no longer make medical, financial, and legal decisions on their behalf. Therefore, It's important to consider who and how decisions will be made for them in the event of an emergency or incapacitation. 

Upon having these conversations, many 18+ year-olds choose to grant their parents Power of Attorney (POA). There are two Powers of Attorney:

• General Durable Power of Attorney: a legal document that grants someone (referred to as the "agent") the authority to make a wide range of financial and legal decisions on behalf of another person (referred to as the "principal"). If the young adult is going away for college or an extended trip, giving parents power of attorney can help manage financial matters such as paying bills, accessing bank accounts, and handling other financial transactions.
• Healthcare Power of Attorney: a legal document that appoints someone else (referred to as the "agent" or "healthcare proxy") to make medical decisions on their behalf if they become unable to do so themselves due to incapacitation, unconsciousness, or other reasons.

In unexpected emergencies, parents with power of attorney can handle health, legal, and financial matters more easily without unnecessary delays.

Reviewing Your Estate Planning

Sending children to college is a significant milestone for both parents and children. As we pause to reflect on the years that got us to this moment, we can quickly see how much our circumstances have changed. Estate Planning considerations vary significantly depending on whether you have young or adult children. It's time to dust off your plan's cobwebs and ensure your estate plan reflects your current circumstances.

Here are some estate planning-related topics that parents should consider when their kids leave for college:

Consider Ability to Handle Money:

Take this opportunity to review how you might distribute your assets to your children, given their ability to handle large sums of money or the impact it might have on their inner motivation to succeed on their own. There are many ways to deliver inheritance 'In Trust' over a period of time or with added trustee discretion.

Revisit Your Beneficiary Designations:

With your child embarking on their college journey, reviewing and updating beneficiary designations on your financial accounts and insurance policies is essential. Consider whether you want to allocate a portion of your assets specifically for your child's education or revise beneficiary designations to reflect any changes in your family dynamics.

Communicate with Your Child:

Openly discussing your estate planning decisions with your college-bound child can help manage expectations and provide them with a sense of security, but not dependence. While these conversations may seem uncomfortable, they can foster understanding and ensure your child is aware of your wishes and the steps you've taken to protect their future.

Conclusion:

Sending your child off to college is a significant milestone in both their lives and yours. As you prepare for this exciting transition, remember to consider the impact on your estate planning. By revisiting beneficiary designations, evaluating inheritance provisions, planning for medical emergencies, and communicating with your child, you can confidently navigate this phase and ensure the protection of your family's future.

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