Consider a POA when sending children to college
I've always felt like late summer and early fall are critical transition times for families. Daylight and temperatures begin to change, kids go back to school and the flexibility of summer transitions to the structure of school and more intense work schedules.
While for the first time in over a decade I am not sending a student back to college, Ethan started high school and I did move my third child, and recent IU grad, Sam to his first adult apartment in Cincinnati a few weeks ago. Not cutting a college tuition check this August feels good, really good.
As my family navigates this transitionary time, I want to take the opportunity to relay some best practices for families in other types of transitions, particularly families sending kids off to college for the first time.
Sending a child to college, in my experience, is an intense bag of mixed emotions. Hope, pride, nervousness and sadness can all come together to completely cook the minds and hearts of parents and students alike. Amidst all this emotion, important details can be easy to overlook.
One of these details is if your child is over the age of 18, which most college students are, in the eyes of the legal system they are technically no longer a child. Having reached the "age of majority," the young adult is now vested with rights of financial, medical and academic privacy, which is a fancy way of saying the parents who pay for everything are no longer legally entitled to information pertaining to any of these subjects.
This is easy to confuse, especially since in my experience with Purdue and IU, the schools will absolutely blow up mom and dad's email inbox and text messages with invoice notifications when tuition is due, but just because they want your money doesn't mean they are willing or able to discuss your student's university financial account.
The same applies to information about grades and academic performance, which always seemed a bit absurd to me, and perhaps most concerning is the privacy laws regarding medical concerns. This can be terrifying if a student away at school experiences a medical emergency or begins to develop a chronic illness. Let's face it, sometimes young adults are not great at communicating medical and mental health issues, and I have experienced moms who had the intuition something was not healthy with their child living a couple hours away, but due to medical privacy policies, were unable to navigate the health care system on behalf of their young adult to find the help they felt was needed.
We all know parenting doesn't end when a child is dropped off at the dorm, so in my experience some special tools can be warranted. The solution my family elected to adopt with our departing college kids is the drafting and implementation of a comprehensive durable power of attorney document.
A power of attorney (POA) is a legal instrument in which one person -- in this case the student who serves as the "principal" -- appoints another person with the authority to act as their agent to receive information and make certain decisions on their behalf. In this context, in the POA the student authorizes the parent as their agent, with broad and durable powers, meaning the delegated authority includes financial, medical and academic issues, and durable meaning the authority continues even if the student becomes incapacitated.
In order to be valid in the state of Indiana, a POA document must be signed by both the student and the parent in the presence of a notary. Our family elected to have our POA docs customized and drafted by a local attorney, but specimen documents can also be found on online legal services websites.
Once our POAs were drafted and executed, we did not charge around giving them to the university, doctors and banks -- we simply stored them safely in a file at home, hoping to never need them. With three college kids, we only needed it once, not in an emergency, but to help one of them navigate a frustrating situation with tuition bills. The process of using it was easy: we simply emailed a copy to the school, and they were then able to discuss and resolve the issue among "adults."
In full disclosure, I am not an attorney and do not intend to provide any legal advice. My suggestion would be to engage a local attorney who can help discuss the pros and cons of this concept and help you draft an appropriate document if all parties elect to do this type of planning. While this process did cost a bit of money, having this type of planning in place did help relieve a little bit of stress as we sent our young adults off into the world. Let me know if you need a referral.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. Stock investing includes risks, including fluctuating prices and loss of principal. No investment strategy can guarantee a profit or preserve against loss. Past performance is not a guarantee of future results. Marc Ruiz is a wealth advisor and partner with Oak Partners and registered representative of LPL Financial. Contact Marc at marc.ruiz@oakpartners.com. Securities offered through LPL Financial, member FINRA/SIPC.
