Should You Add Your College-Age Child to Your Estate Plan?

Dec 19

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Sending your child off to college is an emotional milestone. You’ve prepared them for the real world—from teaching them how to budget to showing them how to cook a proper meal. But have you considered the legal protections they need now that they’re adults? Many parents overlook one critical step: updating their estate plan to include their college-age child.

At Reyna Law, we see this often. Parents assume that because they are still financially supporting their children, they automatically have access to their medical information, bank accounts, or decision-making authority. Unfortunately, in Texas, once your child turns 18, the law considers them a legal adult. This means you no longer have automatic rights to make key decisions if something happens.

If you're a parent in Texas, from Austin to Dripping Springs, seeking to ensure the future security of your college-age child, engaging in estate planning for college-age children in Austin is a proactive, wise choice. This decision is particularly pivotal in securing young adults' financial stability and healthcare preferences as they transition into college life and beyond.

Here’s why updating your estate plan is a crucial next step and how having a trusted Texas estate attorney, like Reyna Law, can help you ensure your family is protected.

Understanding the Legal Implications

Age of Majority and Its Impact on Estate Planning

When your child reaches the age of majority, typically between 18 and 21, it marks a significant legal milestone. At this age, they are recognized as adults and gain the legal capacity to make independent decisions regarding their personal and financial matters.

This transition revokes the parents' authority to make decisions on their behalf, which is why updating your estate plan is essential. Before the age of majority, parents or legal guardians have full authority over their children's lives. However, once this milestone is reached, children can manage their own finances, inherit assets, and make important life choices without parental oversight. This shift necessitates a review and revision of your estate plan to ensure it aligns with your child's new legal status and responsibilities.

As your child steps into adulthood, protecting their interests and ensuring their future, even in unforeseen events, becomes paramount. Estate planning for college-age children is more than asset distribution; it involves making important decisions about their healthcare, financial management, and personal desires. With the complexity of laws like the Health Insurance Portability and Accountability Act (HIPAA) and the Family Educational Rights and Privacy Act (FERPA), the right legal documents are indispensable for assisting your child effectively should they become incapacitated or encounter difficulties.

Power of Attorney and Health Care Proxies

A key aspect of estate planning for young adults involves establishing documents that allow them to designate trusted individuals to act on their behalf in case of incapacitation. A power of attorney (POA) is a critical document that enables your child to appoint a trusted individual, often a parent or another family member, to handle financial and legal matters if they become unable to do so themselves. This ensures that their affairs are properly managed and that someone they trust is authorized to act in their best interests.

Health care proxies, such as a Health Care Proxy or a durable power of attorney for health care, are equally important. These documents allow your child to appoint a healthcare agent who can make medical decisions on their behalf if they are unable to do so. This agent can oversee decisions regarding medical care, procedures, treatments, and even end-of-life care. It is essential for your child to choose someone they trust, as this person will have significant authority over their health care.

Consider a scenario where your child suffers a severe illness and can’t make medical or financial decisions. Without a Health care proxy, you may need to go to court to get permission—a process that takes time and resources. These are not hypothetical stories. These are real issues families face every day.

By working with an estate lawyer like Reyna Law, you can avoid these painful situations, provide peace of mind without facing hurdles during a crisis, and ensure your family is legally prepared for the unexpected.

Texas Health and Human Services Information on Advance Directives

Financial Considerations for College Students

Inclusion in the Will

When considering the financial aspects of estate planning for your college-age child, it's important to think about how their assets, however limited, should be managed and distributed. Even if your child does not have significant assets, having a will or other testamentary documents in place can be beneficial.

A will allows your child to specify how any assets they possess should be distributed upon their death, which can include personal items, digital assets, or any financial accounts they may have.

Including your child in your own will is also a consideration. You may want to designate them as beneficiaries for certain assets or specify how you would like your estate to be distributed if something happens to you. This ensures that your child's financial well-being is protected and that your wishes are respected.

At Reyna Law, we are passionate about helping Texas families prepare for life’s transitions. As experienced estate attorneys, we make it our mission to provide clarity, security, and support during this process.

Establishing Educational Trusts

For parents looking to secure their child's educational future, establishing an educational trust can be a viable option. An educational trust is designed to cover school-related expenses such as tuition, books, and other educational costs. This type of trust can be particularly useful as it ensures that the funds are used solely for educational purposes, preventing them from being squandered on non-essential items.

An educational trust can also offer protection against creditors and can help in avoiding federal taxes. For instance, an irrevocable educational trust can safeguard the funds from being accessed by creditors or being divided in a divorce.

Additionally, it allows you to control how the funds are managed by appointing a trustworthy trustee who can oversee the distribution of the assets according to your instructions.

However, it's important to note that educational trusts can have some drawbacks, such as potentially affecting your child's eligibility for financial aid. Therefore, it is important to seek professional guidance from an estate planning attorney like Reyna Law to ensure that the trust is set up in a way that maximizes its benefits while minimizing any negative impacts.

Emotional and Psychological Aspects of Estate Planning

Preparing Children for Responsibility

Addressing the complex nature of young adult estate planning in Texas, this aspect of estate planning for college-age children is about meticulously crafting their estate plans to reconcile the growing independence of these young adults with the need for continued parental guidance and the assumption of financial responsibility.

This involvement is a powerful learning experience, urging them to critically think about their future, assets, and debts. Young adults need to understand the gravity of these arrangements, recognizing how considerations for trusts or inheritance planning for young adults can impact their immediate and long-term financial realities.

Peace of Mind for Parents and Students

Estate planning offers significant emotional and psychological benefits for both parents and students. For parents, the assurance that their child's wishes are documented and a solid plan is in place can bring immense peace of mind. This alleviates the anxiety and uncertainty associated with unexpected events, enabling parents to concentrate on supporting their child's educational and personal development rather than fretting over potential legal and financial issues.

For students, having an estate plan in place can relieve the stress of the unknown. Knowing that they've designated trusted individuals to act on their behalf if necessary and that their personal and financial affairs are organized, grants them a sense of security and stability. This sense of peace is especially important during a period filled with the challenges of higher education and the transition into adulthood.

Reyna Law understands the emotional and financial challenges of sending a child to college. We make the estate planning process simple, clear, and affordable so you can focus on what matters most—your child’s safety and success. Our team will ensure that your child’s legal protections are in place, tailored to Texas law, and built to meet your family’s needs.

Conclusion: Take the Next Step in Protecting Your Family

Your role as a parent doesn’t end when your child turns 18—it evolves. Updating your estate plan to include your college-age child is an essential step to safeguard their future and give yourself peace of mind. For parents in Austin and Central Texas, hiring an estate attorney like Reyna Law can make a significant difference. Reyna Law offers comprehensive, personalized estate planning services that cater to your unique needs, providing peace of mind and protecting your family's legacy.

Including your college-age child in your estate plan is an important step in ensuring their future well-being and protecting their interests. Remember, estate planning involves more than just financial assets; it also encompasses medical directives, powers of attorney, and educational trusts. These documents provide a safety net, ensuring your child's wishes are respected and their affairs are managed according to your instructions.

Contact Reyna Law to schedule a consultation and ensure your family is protected for every stage of life. Because when it comes to your child’s future, there’s no time like the present.

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FAQ

What type of lawyer is best for trusts?

A trusts and estates attorney is the best type of lawyer for trusts. They specialize in planning for the efficient and effective transfer of assets, preparing trust agreements, wills, powers of attorney, and handling estate and trust administration, as well as related litigation.

How is a trust different from a will?

A trust is different from a will in several key ways:

A trust takes effect immediately upon signing and funding, while a will only takes effect after death.
A trust allows for the management and distribution of assets during the grantor's lifetime and after death, whereas a will only dictates asset distribution after death.
Trusts bypass probate and remain private, whereas wills require probate and become public records.

What is the average cost for a living trust in Texas?

The average cost to set up a living trust in Texas ranges from $750 to $2,500 or more, depending on the complexity and size of the estate. For a simple estate, costs can be as low as $500, while complex estates can cost up to $5,000.