As you might expect, the percentage of Americans with wills and other estate planning documents increases with age. Approximately 80 percent of those age 72 or older have a will. But what about younger Americans? According to a study by Caring.com, 78 percent of millennials and 64 percent of Generation Xers do not have a will, let alone a comprehensive estate plan.
This is most unfortunate, because everyone can benefit from estate planning. If you have minor children, however, an estate plan is critically important. Why? If something terrible happened to you and your spouse, who would care for your minor children?
A Will allows you to name a guardian for your minor children. Without a Will, the court will select a guardian and your children could be raised by someone you never would have chosen yourself.
Or there could be a lengthy, expensive, and stressful battle between members of your extended family over who will get custody of your children. At the very least, young couples with minor children should have a Will that stipulates guardians for the children.
Proper planning can also help ensure your children will have money to pay for a college education. A 529 college savings plan, which is offered on the state level, allows you to create a savings account for college that is exempt from federal taxes. Some of these plans allow for the use of various investment options. Others, known as prepaid tuition plans, let you lock in at the current cost of tuition instead of the future cost.
Another factor to consider is what will happen when your children turn 18.
If you have left them an inheritance, will they be mature enough to manage it responsibly or will they squander it on youthful whims? What if they fall under the influence of unscrupulous predators looking to take a portion or all of the inheritance for themselves? Estate planning allows you to protect your children’s inheritances until they are responsible enough to manage them on their own.
The Importance of Having a HIPAA Release
Let’s consider another scenario. You and your spouse are fine, your oldest son is 18, and he is attending college far from home. He gets into a car accident and is hospitalized. When you hear about this, you immediately contact the hospital to check on his condition, but the hospital refuses to tell you anything. You explain for the tenth time that he’s your son and you have the right to know what’s going on, but the hospital won’t divulge anything at all.
When your children turn 18, they are considered legal adults and their medical information is protected under the Health Insurance Portability and Accountability Act (HIPAA). In the above scenario, the hospital could be prosecuted for violating HIPAA if it reveals your son’s condition. A HIPAA Release Form authorizes the release of medical information to those named in the document. You want to be sure that your young adult children sign HIPAA releases naming you as a person authorized to receive information about their medical condition.