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Preparing Your Young Adult for the Real World

High School Seniors and Young Adults Can Use a Starter Estate Plan

The long, carefree days of summer are ended, and school, or work, is the focus for most of our young adults. If you have a high school senior at home, childhood is also coming to an end for them as they prepare to graduate, turn 18, and enter the “real world.” For those heading to college, trade school, or direct to the workforce, they are already entering the next stage of adult life.

You have done everything you can to prepare your child mentally, emotionally, and financially for what comes next. But are they—and you—legally prepared for their official start of adulthood?

Soon, your child will be able to vote, get married, and sign a mortgage. They will also be emancipated from your parental authority. This means that, without signed legal documents, you could find yourself helpless to intervene in an emergency or other situation where your adult child requires aid.

Gielow Groom Terpstra & McEvoy can help you and your young adult navigate this next stage. Contact our Estate Planning Attorney Chuck Murray to schedule a time to discuss options. Chuck will work directly with your young adult to help guide and plan these decisions.

Adventures in Adulting – What Can a Parent do for an Adult Child?

Parents never stop being parents. No matter how old our kids are, we feel compelled to nurture and protect them. However, our ability to do so is severely limited once our kids turn 18. Many parents learn this when an issue arises and the child needs help, only to find out parents can no longer just act and decide for the child.

Although you may recognize the dangers that await your child in the adult world, you may be unaware that if something happens to them and they have not signed certain estate planning documents and cannot communicate their wishes, you will likely have to petition the court before you can obtain information about them and make decisions for them. And that takes time you might not have.

It does not have to be something bad, like an accident, that triggers the need for a trusted decision-maker. Maybe your child plans to enter the military, attend an out-of-state university, or travel abroad after they graduate. Whatever their plans are, they should have a basic estate plan when they turn 18.

The 18-Year-Old’s Estate Plan Starter Pack

While an 18-year-old may not need a full estate plan, they should at least prepare a few forms that address the new reality of their legal independence and the fact that a parent no longer has the right to manage their affairs.

Financial Power of Attorney

A financial power of attorney (POA) document authorizes someone else to act on your behalf concerning the circumstances laid out in that document. In Michigan we draft POAs for various reasons, but the most common is a financial power of attorney. A financial POA grants a designated person the authority to conduct financial and legal matters, such as paying bills, filing taxes, and managing banking and investment accounts, on another’s behalf based on various circumstances, all of which can be outlined in the document as directed by the Principal, the person granting the authority. The person appointed is the Agent and acts, as permitted in the POA, on behalf of the Principal. POAs can take effect immediately or in the future, based upon a specific condition being met (e.g., incapacity due to injury or illness). The latter option is called a springing power of attorney. The Michigan financial POA statutes updated as of July 1, 2024.

A POA can be broad in scope or limited only to those actions and types of decisions outlined in the document. Also, states have different rules governing POAs, and more than one form may be required if your child is attending school outside of Michigan or changing their residence to a different state than you.

Designation of Patient Advocate (Medical Power of Attorney)

Young people tend to feel invincible. But contemplating mortality, and planning for it, is a part of growing up.

One way to plan for a health crisis is with a designation of patient advocate (DPA) (commonly called a medical power of attorney), which is a set of instructions that a person uses to outline their healthcare wishes if they suffer a debilitating injury or illness and are unable to make medical decisions, even temporarily. It will specify treatment preferences, in general or specific terms, and provides medical treatment preferences such as whether they want a feeding tube, artificial hydration, or a breathing machine to keep them alive. The person creating the DPA is the Principal (similar to the financial POA) and the person appointed is the Agent.

Health Insurance Portability and Accountability Act Waiver

As either a separate document or included in a medical power of attorney, a Health Insurance Portability and Accountability Act (HIPAA) waiver grants named individuals access to the adult child’s protected health information. You will likely need a HIPAA waiver even if your child is still covered under your health insurance. This document allows the named person(s) to ask questions of the medical provider, but not make treatment decisions. Treatment decisions are made by the Agent, who is often listed on the HIPAA form as well.

Talk to Your Teen and Young Adult about Estate Planning

At some point, a parent and teenager should sit down and talk about the legal rights and responsibilities of adulthood. Stress to your teen that, without documents like financial and medical powers of attorney, state law will choose a decision-maker for them, most likely a parent, in the event they are unable to manage their own affairs. If they want a different person making decisions for them, they must name them in legal documents. Also, let them know that preparing legal documents in advance will help them avoid the lengthy and public process of having someone appointed as their decision-maker.

Ready to talk to your young adult about estate planning? We are happy to join the conversation and offer professional guidance. Contact Attorney Chuck Murray at 231-747-7160 or via email.

Does a Young Adult Need a Will? 

As our client—and as a parent—you know that having a comprehensive estate plan ensures that your children will be taken care of if something happens to you. But what if something happens to your child? Should they have a will, too? And if they do not, what happens then?

These are some of the questions a parent might ask themselves and their child when broaching the topic of estate planning. While it might not be the most comfortable conversation, getting your child to step out of their comfort zone and encouraging them to think about their legacy can help their transition to adulthood.

Depending on the young adult and the level of assets, a will may be a good idea, or it may not be needed. Michigan recently increased the amount of assets that can be held but still qualify as a small estate. If someone dies and their assets are valued at less than that amount, a standard probate process may not be necessary. Instead, an assignment of assets or similar function may work. But, if the person dies with assets that are beyond those limits, and simply owning a car and a few other assets may reach past that threshold, then a will likely is a good investment for peace of mind.

Contact Estate Planning Attorney Chuck Murray to discuss options appropriate to you or your child’s needs.

Motivations for a Young Person to Get a Will

When your child turns 18, they are legally an adult and can make a will. Although this is one of the less glamorous aspects of being an adult, it can foster a sense of independence and control over one’s actions and decisions.

The percentage of people who have an estate plan is low across all age groups. Oddly enough, however, the percentage of young adults with a will increased from 16 percent in 2020 to 24 percent in 2024, according to research from Caring.com.^[1] Among the 18- to 34-year-old cohort, these were the top motivators for getting a will^[2]:

• Media coverage (34 percent)
• Family expansion (34 percent)
• Home purchase (28 percent)
• Current events (26 percent)
• Upcoming travel (22 percent)

Most Young Adults Own Some Traditional and Digital Assets

It should be stressed that, even if your child does not own much, they still probably have things of value, such as a bank account, pet, vehicle, or personal possessions (collectibles, art, jewelry, heirlooms, or memorabilia). They could also have an inheritance they are already in possession of or that you are managing for them through a family trust or similar asset.

While you probably have a good sense of the monetary and tangible accounts and property your children own, their online, digital assets may be less known to you but just as real to them as traditional assets—and in some cases, just as valuable. Digital assets are worth real-world money and include the following types of assets:

• Bitcoin and other cryptocurrencies
• Nonfungible tokens (NFTs)
• Funds in PayPal, Venmo, and other payment apps
• Money owed to them from selling products through an online store such as Amazon or Etsy
• Rewards program points
• Monetized content channels that produce ad revenue
• Website domain names
• Copyrighted digital works
• Online wagering and sports betting account funds

It is worth noting that a young adult may also have other digital assets that are valuable from a more sentimental perspective, like extensive photo or video libraries stored in a digital cloud.

Explain to your child where the estate in estate planning comes from. An estate consists of everything a person owns when they die. A young person may think they do not have enough money and property to warrant a will, but in terms of the law, a person can have an estate even if they die with $1 to their name.

And if your young adult child owns anything of any value—even if it is just sentimental value—and cares about what happens to it, they should think about creating a will.

Why Most Everyone Needs a Will

Parents who want to encourage their child to create a will can start by talking to them about the first step—taking inventory and making a list of all of their items and accounts. Next, you can raise the question of what would happen to these things if they were to pass away.

When discussing the importance of a will, you should stress what occurs when somebody dies without a will:

• Without a will, everything a young adult owns will likely have to go through probate court and eventually pass to their parents according to state statute. Some children may be fine with this, but others may prefer that a sibling, stepparent, stepsibling, significant other, friend, or somebody else receives their belongings.
• A charitably minded young person might also be interested in making a gift to a cause they are passionate about.
• Even if a child has only one specific item they want to leave to someone at their passing or only one person they want to receive all of their assets, this could be enough to warrant a will.

A will also allows someone to name a Personal Representative (often called an executor) to settle their affairs. The Personal Representative administers the estate and eventually distributes probate assets, a person’s money and property—both digital and nondigital—based on the instructions in the person’s will and can be granted power and control over their online accounts. This power allows the Personal Representative to do things like deactivate social media, email, and gaming accounts; access and pay online bills; and transfer and share digital content and account access.

If the person does not name an Personal Representative in a will, the court will appoint one based on Michigan statutes. Unfortunately, the chosen Personal Representative may not be their first choice.

Debt is another point to consider. Young adults aged 18 to 23 have an average debt balance of nearly $10,000.^[3] Tell your child that debts are part of an estate every bit as much as their money and property are. Debt that cannot be paid off from what they leave behind will likely disappear and will not transfer to you or other family members. But acknowledging what happens to our debt when we die can be part of the estate planning discussion.

A Will Is a Big Step into Adulthood

When a child turns 18, they may be eager to show off their new adult status. Creating a will is one of the things that only a legal adult can do. While it may not rank high on their priority list, they can benefit from knowing what a will is, how it works, and why it is important.

Talking about wills entails broaching the topic of death, which could discourage your child from taking the next step. But when they are ready to take it, they should have a foundational understanding to build on and a trusted advisor they can turn to for advice. If you would like to meet with us and your soon-to-be adult child to discuss the importance of an estate plan, please give us a call.

Ready to talk to your young adult about estate planning? We are happy to join the conversation and offer professional guidance. Contact Attorney Chuck Murray at 231-747-7160 or via email.

^[1] 2024 Wills and Estate Planning Study, Caring.com, https://www.caring.com/caregivers/estate-planning/wills-survey (last visited Aug. 27, 2024).

^[2] Id.

^[3] Megan DeMatteo, The Average American Has $90,460 in Debt—Here’s How Much Debt Americans Have at Every Age, CNBC (Nov. 14, 2023), https://www.cnbc.com/select/average-american-debt-by-age.

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