Planning Considerations for the High School Grad

Written by Matt Benson, CFP®

Approximately 10% of the accounts we manage are tied to an educational goal. Most are section 529 plans, while others are investment accounts earmarked for some form of post-secondary education. It shows our clients’ prioritization of education and, from our perspective, it is rewarding to be a part of the next generation’s path to adulthood. Writing this during graduation season, it got me thinking of all the moving parts for the family of a high school graduate. The time and dedication the graduate puts in, the parents and grandparents saving over the years, and the juggling a family undertakes to ensure a strong foundation from which to build all come in to play. As we celebrate the next chapter of the graduate’s path to adulthood, I wanted to shed light on some lesser discussed matters as they take the next steps on their journey.

When your graduate goes off to college, there is a good possibility that he/she stays on your health insurance plan. It may come as a surprise to some, but at age 18, the parent no longer has authority over the medical information of the child. Health records of an adult patient, in this case your graduate, are now protected by HIPAA. Asking your son/daughter to sign a HIPAA waiver would allow for information to be shared, should that situation arise. Once signed, the parents should keep the authorization in a safe place to be shown to a doctor or hospital if there was a need to do so. While a HIPAA waiver allows access to information, a Health Care Directive would designate a legal representative to make medical decisions on behalf of the young adult, if they were unable. Without that document, petitioning the court for the right to do so can be time-consuming and costly. Other states may have similar forms, often referred to as health care power of attorney forms, and it would be wise to seek out those state-specific forms if your child is attending school out of state.

The financial affairs of your young adult are now private as well. Occasionally we run across situations where bank accounts have been set up jointly. There are a host of risks associated with that, best suited for a separate article. A better approach may be to complete a Minnesota Statutory Short Form Power of Attorney. This form, specific to Minnesota, gives the legal representative the ability to conduct financial affairs on behalf of their child. This is beneficial planning if there is something that needs to be managed while the student is out of state or takes a year abroad, etc. Again, this proactive planning would save the cost and time associated with going through the courts to obtain that power.

Involving your young adult in these conversations is a great way to get them to understand the importance of their choices early on. Understanding the limits you may have to help in a healthcare situation or talking to them about how they manage finances as they transition to living more independently are very worthwhile discussions.

This content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.