Wisconsin Estate Planning and Tax Law Blog

Powers of Attorney for Adult Children

While it is virtually a matter of standard practice to execute a general durable power of attorney for finances and a power of attorney for health care as part of a comprehensive estate plan, it is far less likely that any consideration is given to planning for young adult children.  I would not say that this is a complete oversight in the planning process, but recently I have become more interested by this idea and the benefits that just a small amount of additional attention can bring.  By young, adult children I am referring to children that have reached the age of 18, but whose parents are still very much involved in his or her financial and health care related world due to the fact that the child is not married or otherwise in a position where someone else could step in to assist them in a time of need.  This scenario is not atypical considering the normal life cycle of people today.  It is typical to see a child graduate high school, go on to college or out into the workforce for a number of years, and then at some point in his or her mid to late 20s he or she gets married.  The interplay with the law, privacy rights, the age of majority (18), and parental rights makes this a very interesting issue. 

It is assumed in most cases that a parent is responsible for a child and privy to information regarding that child until the child reaches the age of majority, which in Wisconsin is 18.  The question then becomes what happens to these rights and responsibilities once the child turns 18?  The answer may be surprising but the truth is the parents really are not in the same position.  Universities will not discuss the contents of a students file with a parent without the student's written consent.  Additionally, banks and other financial institutions will not discuss the child's account or allow the parent access for any reason.   Finally and possibly most importantly, hospitals and doctors will not allow parents to make health care decisions or access medical records without the student's written consent.

One way of addressing these issues is for the adult child to execute powers of attorney to nominate either the parents or another person to make health care and financial decisions for the child in the event they are unable to do so themselves.  This approach uses the same documents that one would find in a typical estate plan:  General Durable Power of Attorney for Finances and a Power of Attorney for Heath Care. 

While it might not be the expected birthday, graduation or holiday gift, the peace of mind provided by proper planning will become evident to adult children at some point in their lives.  With any luck they will realize the amount of care and thought that went into that gift or recommendation. 

Powers of Attorney: The Preferred Alternative to Guardianship

The topic of Estate Planning has historically revolved around the distribution of assets and caring for a decedent's minor children.  By the way, since it is not a term used in our everyday vocabulary I thought it would be worthwhile to explain that the term decedent is one of those terms of art in the estate planning realm that refers to the person who is now deceased.   In any event, the planning by and large tended to focus on post-death issues.  These issues can be properly addressed in a variety of forms including through the use of a Will or Trusts.  The subject matter of this post is planning for incapacity during one's lifetime.

As is the case in the post-death, distribution of assets arena, there is a mechanism in place according to the laws in the State of Wisconsin to deal with situations where no prior planning was done.  When someone dies without a Will the laws of Intestate Succession apply to determine who gets what.  Along the same lines, but with much less comfortable results, if someone becomes incapacitated or is no longer able to make health care or financial decisions for themselves then there are laws and court proceedings to appoint someone else to assist them.  This will typical involve a Guardianship.  A guardianship comes in two forms, guardian of the person and guardian of the estate.  Generally speaking, the guardian of the person is in a position to make health care decisions for the Ward and the guardian of the estate will make the financial decisions.  I mentioned that this process is much less comfortable because the court is involved along with a licensed psychiatrist and/or treating physician.  You may also have noticed that the individual who can no longer care for himself or herself is referred to as the Ward.  In order for a guardianship to be approved the petitioner much show the Court that the proposed Ward is not capable of managing his own health care or finances because of a mental disease such as Alzheimer, advanced dementia, etc. or other conditions limiting his ability to review, process and understand information.  From experience I can say that the guardianship process is a very difficult time from an emotional standpoint.

The good news is that it is possibly to complete and execute a plan that will avoid the unpleasant guardianship situation describe briefly above.  This is accomplished through the use of Power of Attorney for Health Care and General Durable Power of Attorney for Finances.  These two separate and distinct documents are typically included as part of any Estate Plan.  The Power of Attorney for Health Care by law does not become effective until the individual is incapacitated and two physicians sign statements to that effect.  The General Durable Power of Attorney for Finances can be drafted to be effective immediately after it is signed or it can be drafted to only become effective when two physicians sign statements with the finding of incapacity.

It is very easy to provide so much information at one time that it is impossible to process everything.  With that in mind I will break this topic into two separate topics.  I will provide more information on each of the powers of attorney documents in separate posts in the near future.   For additional information regarding powers of attorney it might be worthwhile to review the following material from the State Bar of Wisconsin:  Health Care and POA for Finances.