Estate Planning for Young Adults

Attorney Christine S. Anderson

December 2016

Young adults return home this time of year to visit for a few days or a few weeks. Consider taking this opportunity to discuss appropriate estate planning with them.

Perhaps the most fundamental estate planning document that all people over the age of 18 should sign is the Advance Directive for Health Care. This document includes two parts: a durable power of attorney for health care and a living will. Once a person attains the age of 18, his or her parents are no longer automatically in charge of health care decisions, if the young adult is incapacitated as the result of an accident or illness. Having an agent designated under a durable power of attorney for health care can eliminate questions about who is authorized to make decisions on behalf of the injured or ill young adult, at an already difficult and stressful time. The Advance Directive for Health Care is a simple form, easy to execute. The form can be downloaded from the Estate Planning page at our website. Although we strongly recommend that young adults sign Advance Directives for Health Care, it is noteworthy that as a result of a 2015 change in the law, if there is no agent designated under a durable power of attorney for health care, there is a procedure for the health care provider to designate a health care surrogate to act on behalf of an incapacitated person. See our February 2015 blog article on Surrogate Health Care Decision Making.

Along the same lines, parents of young adults are often surprised that the health care providers of their young adult children are not allowed to communicate with them about the health care provided to the young adult patients. If you and your young adult child determine that it would be helpful for the health care providers to be able to share information with you, we can prepare a HIPAA release for a young adult to sign, which would authorize health care providers to share information with the designated agent.

Many young adults have bank or brokerage accounts that were set up by their parents or grandparents when they were very young. These accounts are most often governed by the Uniform Transfers to Minors Act, the 'œUTMA.' The adult in charge of the account is referred to as the custodian. These accounts are often referred to as custodial accounts or UTMA accounts. Under New Hampshire's UTMA, the custodial relationship ends when the beneficiary attains the age of 21. If the balance in the account is modest, it may be perfectly appropriate for the young adult to take control of the funds at the age of 21. If the balance in the account is substantial then it may be appropriate to suggest to the young adult that he or she consider transferring the funds into a revocable or an irrevocable trust for his or her own benefit.

If a person has no will, his or her assets will pass under the intestacy law. The parents of a single person with no children inherit in the event of their child's death. A young adult may prefer that his or her assets pass to siblings, cousins or nieces and nephews rather than to his or her parents. A simple will can be drafted to achieve this intention. Further, accounts can be designated to avoid the probate process via transfer on death (TOD) or pay on death (POD) designations. If a young adult owns real estate, a revocable trust, with the young adult as the trustee and the beneficiary, should be considered as the vehicle to own the real estate so that it does not pass through probate in the event of death.

Finally, it is never too soon to start planning for retirement! Consider encouraging your young adult child or grandchild to contribute to a Roth IRA. You can make a gift into a Roth IRA for the benefit of your child or grandchild. The limit for contributions to a Roth IRA are capped at $5500 and cannot exceed the annual earnings of the young adult.

We hope you enjoy time with your families over the holidays this year. If you would like to discuss appropriate estate planning for your young adult child or grandchild, call the office to schedule a time to meet with Alyssa or me.

Best wishes for a healthy, peaceful New Year.

Young adults return home this time of year to visit for a few days or a few weeks. Consider taking this opportunity to discuss appropriate estate planning with them.

Perhaps the most fundamental estate planning document that all people over the age of 18 should sign is the Advance Directive for Health Care. This document includes two parts: a durable power of attorney for health care and a living will. Once a person attains the age of 18, his or her parents are no longer automatically in charge of health care decisions, if the young adult is incapacitated as the result of an accident or illness. Having an agent designated under a durable power of attorney for health care can eliminate questions about who is authorized to make decisions on behalf of the injured or ill young adult, at an already difficult and stressful time. The Advance Directive for Health Care is a simple form, easy to execute. The form can be downloaded from the Estate Planning page at our website. Although we strongly recommend that young adults sign Advance Directives for Health Care, it is noteworthy that as a result of a 2015 change in the law, if there is no agent designated under a durable power of attorney for health care, there is a procedure for the health care provider to designate a health care surrogate to act on behalf of an incapacitated person. See our February 2015 blog article on Surrogate Health Care Decision Making.

Along the same lines, parents of young adults are often surprised that the health care providers of their young adult children are not allowed to communicate with them about the health care provided to the young adult patients. If you and your young adult child determine that it would be helpful for the health care providers to be able to share information with you, we can prepare a HIPAA release for a young adult to sign, which would authorize health care providers to share information with the designated agent.

Many young adults have bank or brokerage accounts that were set up by their parents or grandparents when they were very young. These accounts are most often governed by the Uniform Transfers to Minors Act, the 'œUTMA.' The adult in charge of the account is referred to as the custodian. These accounts are often referred to as custodial accounts or UTMA accounts. Under New Hampshire's UTMA, the custodial relationship ends when the beneficiary attains the age of 21. If the balance in the account is modest, it may be perfectly appropriate for the young adult to take control of the funds at the age of 21. If the balance in the account is substantial then it may be appropriate to suggest to the young adult that he or she consider transferring the funds into a revocable or an irrevocable trust for his or her own benefit.

If a person has no will, his or her assets will pass under the intestacy law. The parents of a single person with no children inherit in the event of their child's death. A young adult may prefer that his or her assets pass to siblings, cousins or nieces and nephews rather than to his or her parents. A simple will can be drafted to achieve this intention. Further, accounts can be designated to avoid the probate process via transfer on death (TOD) or pay on death (POD) designations. If a young adult owns real estate, a revocable trust, with the young adult as the trustee and the beneficiary, should be considered as the vehicle to own the real estate so that it does not pass through probate in the event of death.

Finally, it is never too soon to start planning for retirement! Consider encouraging your young adult child or grandchild to contribute to a Roth IRA. You can make a gift into a Roth IRA for the benefit of your child or grandchild. The limit for contributions to a Roth IRA are capped at $5500 and cannot exceed the annual earnings of the young adult.

We hope you enjoy time with your families over the holidays this year. If you would like to discuss appropriate estate planning for your young adult child or grandchild, call the office to schedule a time to meet with Alyssa or me.

Best wishes for a healthy, peaceful New Year.