If you are about to send a child off to university or to a gap-year, you’re probably busy with last-minute shopping, packing and worrying about accommodation.
However, there is one more thing you should do as you prepare for the big separation: Ask your young adult to sign an Enduring Power of Attorney and Will.
These two estate planning documents, more commonly associated with older people, are essential for young people too.
Without them, parents don’t have the authority to manage their young adult child’s affairs or make financial decisions if their child was to lose capacity. That means if a young adult is in an accident and becomes disabled, even temporarily, a parent may have difficulty making decisions for their child.
The risk is real. Accidents are a major cause of death for young adults, and statistics show that there are nearly 740,000 preventable hospitalisations in Australia each year.
But it doesn’t take a death or serious injury for parents to need to act on a child’s behalf.
Imagine if your child, after travelling to a foreign country for a working gap year, contracts a severe viral infection that required them to seek medical attention and upon you urgently ringing to ask about their condition finding that the medical team are unable to discuss your child’s condition with you for privacy reasons. This can be extremely stressful because as much as you have prepared them to look after themselves you may still be their back up in emergency situations.
After spending 18 years raising your child to suddenly be unable to obtain information when your child may need assistance can be a huge and avoidable shock.
This can easily be avoided by ensuring your child prepares an Enduring Power of Attorney and Will prior to heading off to university or on a gap year.
The Enduring Power of Attorney authorises a person (called an Attorney) to make health care decisions for your child in the event that your child is unable to make their own decision and also permits your child’s attorney to assist with finances or other legal documents if required.
This may be essential if your child is severely ill and unable to make a decision about the way in which their health care will proceed.
The Enduring power of Attorney can be effective from the moment it is signed, or your child can specify that the Attorney’s powers will only begin upon the incapacity of the child. In circumstances of overseas travel we will usually recommend an immediate start.
Though the parent is usually the best person to put in charge of a matter for the first time home leaver, when relationships are strained or you routinely travel yourself for work, your child might appoint another trusted adult, such as an Aunt, Uncle or older sibling – whatever best suits your child’s circumstances. It’s also important to name an alternate Attorney in case, when the time comes, your child’s first choice is unable to be contacted or unwilling to act.
You don’t have to be a helicopter parent to need an Enduring Power of Attorney, it is an essential document if something goes wrong. In case of an emergency, having an Enduring Power of Attorney makes it easier to contact the local embassy or transfer money from a child’s bank account, if necessary.
If the unthinkable does happen, and your child dies, the Will appoints the executors who are the persons authorised to make decisions about funeral arrangements including returning a body to Australia if required.
How can you get children to sign these documents, especially if they are still at the stage of thinking Mum and Dad are clueless about practically everything?
In our opinion gentle persuasion coupled with an offer to pay (if that is an option) works best!
Another tack is to ask a lawyer to meet briefly with you and your child and explain the significance of the documents.
Compared with other expenditures for your child’s big adventure into adulthood, the price you will pay for additional piece of mind is modest.
Please contact our Tax, Structures + Planning team for more information or to address any questions you may have.