Even
for children who have newly become legal adults, parents need to be
empowered to make decisions to help protect them in times of need.
Laying out important considerations for families to discuss before and
after children turn 18, McManus & Associates – top-rated,
Tri-State-Area-based trusts and estates law firm – today released the
newest edition of its educational focus series. The discussion, “Top 10
Ways to Protect Children Under 18 and Over 18, Stateside and Abroad,”
identifies questions parents should evaluate, from who should be named
as local representatives on a health care proxy for minors to whether a
prenuptial agreement is appropriate if an adult child is soon getting
married. Listen to the call with clients.
“While
young adults today are far more astute and sophisticated on world
matters than 100 years ago, they’re also far less independent than when
kids were married at 16 and took over the family farm at 18,” explained John O. McManus, top AV-rated attorney and founding principal of McManus & Associates. “The
fact is that the frontal lobe is not fully developed until the
mid-20’s, and people who have newly entered adulthood still need to tap
their parents’ experience-earned insight when evaluating important
decisions.”
1. What are the legal and medical risks for children upon reaching age 18, legal adulthood?
a. Once
your children are legal adults, you are no longer able to automatically
make medical decisions on their behalf, access their medical records,
or take any other action for their benefit if they are unable to do so.
b. Additionally, parents will not have automatic access to their child’s financial accounts if they are over the age of 18.
c. Risk
of inadequate, inappropriate or insufficient medical care is a primary
concern for many parents with children leaving for school for the first
time.
d. Before
your “adult children” leave for school, they must consider completing a
Health Care Proxy, Durable Power of Attorney, and an Authorization for
Release of Protected Health Information to provide parents with the
authority to act with respect to their medical, legal, and financial
needs if they are incapacitated or otherwise unable to handle their own
affairs.
2. What are the necessities when my child is studying overseas?
a. All
of the reasons above take on an extra urgency if your child is away
from home in college or out of the country on a semester abroad.
b. Learn
about the healthcare system of the county where your child will be
living. There are often differences between private and public
hospitals, restrictions on international insurance accepted and,
potentially, qualification standards for medical professionals.
c. Colleges
will not release a student’s medical records, even to parents, if the
student is over the age of 18. This may be extremely detrimental to a
child’s well-being in a physical or emotional medical emergency. Advance
planning can facilitate communication between the foreign hospitals and
parents.
3. Upon reaching age 18, does my child need a will?
a. We
believe that broadly the answer is no. Most young adults do not possess
assets sufficient to merit the use of a Last Will and Testament.
b. However,
if large gifts have been made to an adult child, if the adult child
owns shares in a family business, or if he or she received money from a
settlement, a Last Will and Testament may be a critical component in the
family’s overall estate plan to avoid unintentional beneficiaries and
estate tax implications.
c. The
Will should provide direction for a power of appointment to allow your
child to appoint trust assets to descendants and/or a spouse.
4. Should I appoint my adult child as my representative in my incapacity planning?
a. Adult children may be the best choice to name as fiduciaries to make the parents’ medical and/or financial decisions.
b. If
they are away for school, however, consider appointing a local person
as a representative in the event that the child is not able to serve.
c. The
adult child may be appointed in the documents to serve as a trustee at a
future date (when a certain age is reached, such as 25).
d. Often including adult children can be a trigger to start important conversations about wealth, inheritance and family mission.
5. Should I make outright gifts to my adult children? What are the risks of these gifts and custodial accounts?
a. Outright
gifts to adult children should not exceed a certain amount as outright
gifts are exposed to attack and may deter your child from making his or
her own way in the world.
b. Presently,
$14,000 from each parent can be transferred on an annual basis to each
child and grandchildren. Additionally, up to $5.34MM can be transferred
gift tax, estate tax, and GST tax free to children and grandchildren.
c. A
better way to make larger gifts to children is in lifetime trusts that
will protect the assets against any unintended diversions or reversals
(i.e. divorce, law suits, creditors, etc.) that a child may encounter,
while still providing for the child’s needs and allow the child to
maintain a certain quality of life.
d. We often recommend that a child serve as co-trustee at age 30 and sole trustee at age 40.
6. My child is getting married. Should I review with them whether a prenuptial agreement is appropriate?
a. We
support having conversations about wealth with children far before this
decision needs to be made. With a set “on-boarding” process for
children’s significant others, you set the stage for a successful
conversation around finances.
b. Certain assets, which are intended to stay within the family, can be protected by trusts and pre-nuptial agreements.
c. Life
estates in real property can also be set up to provide for the in-law
spouse while keeping the asset moving down the family line.
d. Significant
work has been put into creating trusts for your children so that there
is little risk of diversion, but a child can empty the trusts. Children
should be well-versed in the overall strategy to invest the assets in
trust instead.
7. What are the medical risks if you are unavailable for your minor children?
a. In
the event that parents or guardians are unavailable and minor children
require medical care, a hospital or doctor's office will reject the
treatment that the child needs, unless there is a clear risk of death.
b. In
the past, care providers have been sued for wrongly treating children
without the consent of the parents and now mandate formal written
permission from a child's parents if they are not present or cannot be
contacted.
c. A local representative should be appointed to assist in getting your child admitted to the hospital.
d. In
order to assure that minor children are treated properly and
immediately, their Health Care Proxy and Authorization for Release of
Protected Health Information will name representatives who will be able
to (i) receive their critical medical information; and (ii) make medical
decisions for them if the parents are unable to do so.
e. A
set of the documents should be kept at the house, in a place that is
easily accessible such as inside the kitchen cabinet door.
f. Electronic copies also suffice.
8. What if both parents of a minor become incapacitated?
a. The Wills we prepare provide comprehensive directions for the guardians that
outline expectations and wishes for the minor child's upbringing,
including visitation groups, outlines for holidays or important life
events, etc.
b. These instructions may include an advisory group
to assist the guardians in making decisions and understanding the
parents’ objectives and guidance regarding priorities for education,
medical treatment, household support, and other important
considerations.
c. A family mission statement will assist with direction for your children and may be critical if a child has special needs.
i. A
supplemental needs trust provides for individuals with special needs
while allowing them to continue to receive support from the government.
9. What issues do we see for minor children in foreign jurisdictions? Or children with foreign citizenship?
a. Keep
children’s passports current – even expedited passports can take weeks
to process. In the event of emergency travel, it is critical that all
children’s passports are up-to-date.
b. Without
a legal guardian, a child will not be given a passport. A third party
must be authorized by the court in the absence of a legal guardian to
apply for the passport.
i. This may be remedied by a signed and notarized document prepared by parents appointing this individual.
c. If
children of foreign nationality living in the US must move abroad to
live with the guardian named in the Will, having a passport from the
same country as the guardian can speed up the departure process since
there will be no need to wait for a visa approval.
d. Finally, most airlines have policies regarding accompaniment of a minor for air travel; check with your preferred carrier.
10. Your child is under 18 and your selected guardians reside overseas. What are the risks to getting them “home”?
a. A
Last Will and Testament should name temporary guardians in the United
States. The temporary guardians assist in the process of transferring
the children overseas to be united with the appointed guardians. A
temporary guardian can also be critical if the child is an infant or
requires other forms of immediate care.
b. In
order for the child to live abroad long-term, he or she will need to
apply for a visa to the country of destination. Visa applications can
require health screenings, background checks, and other time-consuming
tasks that delay the child’s departure from the U.S. If the guardian
named in the will cannot make it to the U.S. to take custody, a
temporary local guardian can help navigate this process.
c. Trap for the unwary:
Children in the U.S. with a green card are only permitted to leave the
country for a period of one year before needing to reapply for re-entry
to America. After a two-year period, the green card will expire.
d. New
York will not appoint a non-US citizen guardian and will require a
local co-guardian who can assist in moving the child abroad. A foreign
guardian can serve alone in NJ, CT, or FL, for example; however, the
courts will look at the best interest of a child and may request that a
local co-guardian be named. New
Jersey will send paperwork for guardianship to the Embassy or Consulate
office in the country where the named guardian resides. The
testamentary guardian will have to sign the papers at the Embassy, and
sole guardianship may be granted.
“Talk
to your children about why it’s important for them to sign documents
that enable you to act on their behalf, if necessary,” McManus said.
“Expect the best, of course – but you’ll be glad you planned for the
worst if you’re ever confronted with it.”
To find out how McManus & Associates can help you and your family create a plan of protection, go to www.mcmanuslegal.com.
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About McManus & Associates
McManus
& Associates, a trusts and estates law firm, was formed in 1991 by
John O. McManus to provide the high quality experience of the largest
firms coupled with the intimacy and efficiency of a specialized boutique
firm. Over 20 years later, McManus & Associates continues to earn
its reputation for integrity, intellectual ability, efficiency, and
enduring relationships.
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