Essential Legal Documents for the College Student

It's that time of year again- the time for 18-23-year-olds to head off to college around the country. Whether you have a child moving away for the first time as a freshman or you're a fifth year senior counting down the days of your farewell tour of a final year at your school, it's important to remember that, while it may seem like it, you or your child is not invincible. Accidents happen, and it's important to realize that, when they do, having the proper paperwork in place can greatly improve a parent or loved one's ability to help.

Upon reaching the age of 18, an individual is an adult in the eyes of the law. With this comes some important consequences which need to be considered in order to avoid a possibly messy legal situation. Upon a child reaching the age of 18 a parent’s right’s in controlling some affairs of that child become significantly diminished. Of particular note: 1) parents will no longer be able to control the healthcare decisions of their child and 2) parents will no longer be able to act on the child’s behalf in financial transactions.

In the event the child is hospitalized, medical personnel have no obligation to follow anyone’s wishes regarding treatment or consent except for the patient’s, and medical records are going to remain sealed from view absent a court order directing otherwise. In the event of a debilitating accident, illness, or mishap that leaves the child unable to determine his or her own course of treatment or who can make those decisions on his or her behalf, a doctor’s hands are going to be tied unless a court intervenes.

Similarly, financial institutions like banks, utility providers or even landlords typically will not permit an individual that is not named on an account to access its funds or information. This means that if a child is in the hospital for an extended period of time unable to act on his own behalf, the financial repercussions of failing to do things such as pay bills in a timely fashion can be long-lasting in the form of bad credit and collections.

So how do parents and student plan for the unthinkable? The answer in this case is to execute two relatively simple documents, which, if done correctly, will ensure that a parent will be able to act on behalf of his child both medically and financially should the need arise.

The two documents a new student should not leave home without are:

1) A Durable Power of Attorney for Healthcare (including HIPAA Release)

Generally speaking, a power of attorney is a document in which one individual (the “principal”) grants another individual (the “agent”) the authority to act on his behalf, many times according to a specific list of directions. The concept can be thought of in the same light as a sports agent whom an athlete grants another individual authority to act on his behalf to do things such as negotiate contracts. If done correctly and validly executed according to state law, then a power of attorney grants the agent the ability to make decisions on behalf of the principal. Traditionally a power of attorney terminated upon the principal’s death or incapacity, however laws now provide that the principal can grant the agent powers to act on the principal’s behalf event if the principal becomes incapacitated (this is the durable part of the durable power of attorney).

An agent is able to take any action which the principal would be permitted to take on his own behalf. When it comes to medical decisions, a durable power of attorney, permits the agent to make medical decisions relating to treatment on behalf of the principal and, properly drafted, it allows the agent access to the principal’s important medical records which may be necessary to consider when determining a course of treatment. Further, medical personnel are generally permitted to rely on the authority of the agent when exercising his powers.

2) A Durable Power of Attorney for Finances and Property

The durable power of attorney for finances and property functions the same as the durable power of attorney for healthcare; but it addresses powers related to non-medical actions such as those related to finances and property management and transactions. With a valid durable power of attorney for finances and property an agent should be able to access the principal’s bank accounts and financial records, pay rent, utilities and credit card bills, manage investments and loans and so on.

Important to note as well is the ability to structure the powers of attorney to limit the agent’s ability to take action until the principal is deemed incapacitated so the principal is the only party able to act on his behalf unless or until something happens.

How are powers of attorney drafted and where can I get them?

State law governs powers of attorney and their requirements for execution. Many states, like Illinois and Wisconsin, have statutes that actually contain a short form power of attorney. A power of attorney drafted in substantially similar language as that contained in the statute and executed according to the statutory directions will be presumed valid. This means that it is entirely possible to draft a valid power of attorney on your own without assistance of an attorney. However, a word of caution: while the statutory form may accomplish much of what you need it does not contain some powers such as the power to make gifts or change beneficiary designations on a trust, so depending on the individual the extent of his assets, the statutory form may tie an agents hands in some ways. Therefore, it may be wise to discuss these documents with an estate planning attorney licensed in your state and familiar with powers of attorney, disability planning and estate planning in general. Many lawyers will draft the documents for you for little charge and the benefits of doing it correctly can be great.

So parents, as your son or daughter prepares to head off to college in the coming weeks consider sending him or her away with a durable power of attorney for healthcare and durable power of attorney for finances and property. No matter how unlikely it seems that you’ll ever need to use them, find solace knowing that you’ll be able to act to protect his interests, if necessary. You have plenty of things to worry about during this transitional period in life- don’t let this be one of them. And students, believe it or not, you're not invincible. In the event something happens you need to make sure that your parents are still able to have your back.

Michael F. Brennan is an attorney at the Virtual Attorney™ a virtual law office helping clients in Illinois, Wisconsin, and Minnesota with estate planning and small business legal needs. He can be reached at michael.brennan@mfblegal.com with questions or comments, or check out his website at www.thevirtualattorney.com.

The information contained herein is intended for informational purposes only and is not legal advice, nor is it intended to create an attorney-client relationship. For specific legal advice regarding a specific legal issue please contact me or another attorney for assistance.

By Michael Brennan

college student with books