Congratulations to all the recent high school graduates and to the parents who have supported them along the way. This exciting milestone, whether leading to college, the workforce, or other adventures, comes with important considerations for the future.
#1 Understanding Legal Changes at 18
- Legal Adulthood: When a child turns 18, they become a legal adult, and parents no longer have automatic rights to make decisions or access information about their medical care, finances, or education.
- Privacy Laws: Laws like the Health Insurance Portability and Accountability Act (HIPAA) and the Family Educational Rights and Privacy Act (FERPA) restrict access to medical and educational records. Without the proper legal documentation, parents cannot access these records.
#2 Power of Attorney & Estate Consideration
Angela Tormey of AceMaven Legal emphasizes the importance of estate planning when a child turns 18. She says, “Just a few careful steps can make such a huge difference and bring peace of mind to the entire family.” Tormey also notes that an estate plan for a young adult doesn’t have to be overly complicated.
Whether your kids are part of your estate planning or have their own set up, this is a key detail that is often overlooked. I know nobody wants to think about negative things happening like accidents or illnesses, but some important legal implications happen when a child turns 18 and becomes an adult. Will you have access to health information or medical decisions? Can you find out about their tuition and grades?
Essential Legal Documents
- Medical Power of Attorney: This document allows a designated person (often a parent) to make medical decisions if the young adult is incapacitated or unable to make decisions themselves.
- Durable Financial Power of Attorney: This grants a designated person the authority to handle financial matters for the young adult. It can be particularly useful if the child is traveling, studying abroad, or incapacitated.
- HIPAA Authorization: This form allows the healthcare provider to share medical information with the designated individual. It’s crucial for parents to have this to stay informed about their child’s medical condition and treatment.
- Living Will/Advanced Healthcare Directive: This document specifies the young adult’s wishes regarding end-of-life care. It can guide family members and medical professionals if the young adult is unable to communicate their preferences.
If you have questions about these important documents, Angela is a great connection and would be happy to help with what you and your graduate need. You can reach her at AceMaven Legal at 813-445-8178.
#3 Planning for Financial Future
Life Insurance
As life stages change, so do financial needs. While an 18-year-old might not have significant debts or dependents yet, purchasing life insurance early can lock in lower premiums and provide long-term financial security.
Sara Bachelder at Sara B and Associates explains purchasing life insurance “is the best way to purchase dollars for pennies and to transfer wealth from one generation to the next.” If you have questions about life insurance, Sara is always happy to discuss this with your family. You can reach her at 813-997-1947.
Financial Planning
Here are some essential steps to make sure your child is on a good financial path”
- Budgeting and Financial Management:
- Create a Budget: Help your child establish a budget to track income and expenses, ensuring they live within their means and save for future goals.
- Emergency Fund: Aim to save at least 3-6 months’ worth of living expenses in an easily accessible account to cover unexpected costs.
- Credit Management:
- Building Credit: Start building a good credit history by responsibly using a credit card, paying bills on time, and keeping debt levels low.
- Credit Score Awareness: Understand the factors that affect credit scores and regularly check credit reports for accuracy.
- Savings and Investments:
- Start Saving Early: Even small, regular contributions to a savings or investment account can grow significantly over time due to compound interest.
- Retirement Savings: If they have earned income, consider opening a Roth IRA to start saving for retirement. Contributions grow tax-free, and withdrawals in retirement are also tax-free.
- Investment Basics: Learn about basic investment options like stocks, bonds, and mutual funds. Consider using robo-advisors or consulting a financial advisor to develop an investment strategy.
- Education and Career Planning
Savings and investments are often overlooked by college students and young adults. Retirement may seem distant, but starting early with a solid financial plan can set them up for long-term success. Speaking with a financial advisor can help your child make a plan where they can set easily attainable goals to work towards their future plans whether that is buying a house, retiring, etc.
#4 Personal Property Protection
While it might seem minor compared to other topics, personal property protection is crucial for students moving to college or their first apartment. Some dorms and apartments require specific insurance coverages. Most homeowner’s policies cover a limited amount of personal property and liability for a dependent student away at school. This can sometimes satisfy the dorm or apartment’s insurance requirement, but it does depend on your home policy, so you’d want to review the terms in the policy and discuss any questions with your agent.
Renter’s insurance is a cost-effective way to protect personal belongings and provide liability coverage. It’s often more advantageous than relying on a homeowner’s policy. Renter’s insurance is very inexpensive – usually $10-$20 per month depending on how much coverage your child needs. This provides coverage for the personal belongings as well as liability if someone else is injured at their dorm or apartment.
The big advantage to getting renter’s insurance versus using coverage from your home insurance is that if there is a claim, it will be on the renter’s insurance and won’t show up on your primary home insurance record. We know the struggle Florida home insurance has been lately, so keeping your claim history clean can help your rates and options for your primary residence insurance.
If you have questions about renter’s insurance or your own home coverage, our team at Think Safe Insurance will be happy to help. You can give us a call at 813-425-1626 or contact us online.
Conclusion
Taking these steps can ensure a smooth transition into adulthood for your new graduate, providing them with the financial security and peace of mind they need. If you have any questions or need further assistance, don’t hesitate to reach out to the experts mentioned above.