Kids Turning 18? Here’s What Advisors Say Parents Need to Know

Many parents are surprised to learn they don’t have automatic access to their children’s health and financial records after age 18, an issue that can be especially problematic in an emergency. It’s an area where some advisors are doubling down to make sure clients and their children are prepared.

Bank of America Private Bank, for example, gives clients a handout informing them about critical documents that allow parents to continue accessing the medical and financial records of a child who has legally become an adult. 

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“These things are incredibly important, but they aren’t necessarily top of mind for families,” says Jesse Mandell, next-generation strategist at Bank of America Private Bank. “It’s an opportunity for advisors to be proactive and help clients through issues they might not otherwise know about.”

The handout provides information about obtaining a release form for the Health Insurance Portability and Accountability Act, or HIPAA, which allows a parent to access a child’s medical records and gain information about their medical treatment. The guide also discusses a medical power of attorney, which would allow a parent to make medical decisions on their child’s behalf, and an advanced directive or living will, which outlines a person’s life support wishes.

It also references custodial accounts, which are relevant to some clients, and a financial power of attorney, which authorizes a parent to take care of an adult child’s financial affairs. The handout also alerts families to the Family Educational Rights and Privacy Act, or FERPA, which restricts colleges and universities from releasing educational records without a student’s express permission. Without a signed release, parents can’t access their student’s accounts, bills, or grades, for example.

Prepare long before an 18th birthday. Ideally, advisors should start broaching these topics with clients a few years before their children cross the legal age threshold and follow up as it gets closer to make sure families are on top of relevant issues. Several advisors say they routinely recommend that attorneys draft necessary documents.

All too often HIPAA forms and other necessary documents aren’t in place when an emergency happens, leaving parents scrambling for information about their child, Mandell says. He offers the example of a college freshman taken to a hospital emergency room after an accident. The mother learned about the accident from her daughter’s roommate, but without proper documentation, the hospital wouldn’t even confirm the daughter was a patient, let alone give the mom information about her status or treatment.

“It’s imperative that those documents are in place,” says Colleen Carcone, director of wealth planning strategies at New York-based TIAA, who routinely has these conversations with clients as their children approach legal adulthood. “We view them still as children, but in the eyes of the law they are generally considered adults,” she says.

Discussing kids’ concerns. To be sure, children may initially balk at giving parents access to their medical information or finances. But parents can ease their worries by stressing it’s not an attempt “to control them or to helicopter parent them in college. It’s really just to have something in place in case it’s needed,” says Julie Thomas Sward, a CFP and partner at St. Louis-based Moneta Group. 

Some advisors are also working with their clients’ children to help ease them into financial adulthood. Before they are 18, Sward encourages teens to meet one on one with a younger advisor at her firm so it’s more of a peer-to-peer conversation and comes across better, she says. At these meetings, they discuss issues such as budgeting, saving, and investing, as well as the importance of protective documents such as a healthcare directive, a healthcare power of attorney, and a financial power of attorney.

Jeff Carbone, managing partner of Huntersville, N.C.-based Cornerstone Wealth Group, also discusses actionable items such as how and when to transition custodial accounts, setting up a brokerage account in children’s names, the types of accounts they could consider, and the pros and cons of each. He hosts family meetings where discussions often include budgeting, savings, basic financial principles, buying a car, and credit card usage. With so much attention these days given to young investors and stock-buying frenzies, teens are more attuned to these topics, he says. “It’s becoming more popular to have these kinds of talks than five years ago,” Carbone says.

TIAA’s Carcone also suggests parents revisit their estate plan after their kids turn 18. Parents likely drafted these plans when children were quite young and their finances were simpler, she says. Some estate plans, for instance, may call for assets to remain under custody only until the child turns 18, but the parent’s thinking or family situations may have changed. “I always ask, ‘Are you comfortable that he or she can handle this?’” Carcone says.