Kiplinger: “Why You Need Medical, Financial Powers of Attorney for Your High School Grad”

By Marguerita Cheng, CFP® Pro

Kiplinger, July 1, 2023 — Did you know that if you have adult children away in college or just living out of state or on vacation and they become incapacitated in a severe car or diving accident or a nasty fall while hiking, the hospital cannot legally offer you any information about their condition? In addition, the medical staff cannot allow you to make important financial and medical decisions for your adult children.

These concerns have been top of mind for me recently as my daughter graduated from high school and will be attending school out of state. If you’re like me and want to be proactive, below I discuss what you can do to make sure you stay informed if your adult child has a medical emergency.

What information is protected?

The Health Insurance Portability and Accountability Act of 1996 is American legislation that sets privacy standards to limit the disclosure and use of a patient’s health information, also known as “protected health information.” Adult children can keep their information private so parents, caregivers or friends cannot access it.

According to HIPAA, when your child becomes an adult, your rights and their rights change. The law limits the information healthcare providers may disclose about your adult child’s physical health and mental treatment.

Protected health information can include:

  • The patient’s personal details (their name, date of birth, address, Social Security number, personally identifiable information and other biometric identifiers)
  • Medical history including mental and physical health conditions
  • The kind of care given to the adult child
  • Financial information on past, present and future payments for the care offered

This information can be shared only with friends, caregivers, and family under the right circumstances. The solution is to get medical and financial powers of attorney completed and in place for each of your adult children. Powers of attorney should be signed before anything goes wrong, so it’s a good idea to do this before your student goes to college or university.

What are POAs?

Durable powers of attorney are legal documents that give someone the power to act or choose in place of your adult child. The word “durable” means that the document stays in place if your adult child cannot make personal decisions or becomes incapacitated. A valid healthcare power of attorney means the trusted person is legally allowed to care for critical healthcare issues or direct medical care if your child is incapacitated.

Durable medical POA

As a parent to an adult child, you can get a medical power of attorney. This document gives you the power to make healthcare decisions if your child is too injured to speak. The person who is appointed and named in the document is known as the “agent,” “healthcare surrogate” or “attorney-in-fact.” When your child makes a durable power of attorney for healthcare, they can name you as the trusted person who should oversee all their healthcare and medical care if they are unable to do so.

The medical POA is effective if your adult child suffers from severe medical conditions requiring an agent to act. Such conditions may include losing power of communication due to accident, dementia, or any other disease, falling into a coma due to brain injury or stroke, or having a mental health lapse that compromises their ability to make sound decisions. In these cases, the doctor will authorize the agent to take over and ensure that the following steps are carried out to ensure your child gets the best medical care according to their needs and wishes.

As an agent, you will ensure that healthcare providers and doctors offer your child the best medical care they wish to receive. If you serve as an agent, you must listen to your child and follow their treatment choices and preferences when arranging their care.

If your child wants to clarify their wishes, they can create a healthcare declaration known as a living will. This document offers written healthcare instructions to their healthcare providers and agents.

After completing a medical POA and, if desired, a living will, your adult child should ensure that everyone involved in their care and health can access those. They can provide copies to their insurance company, their physicians, their hospital, important family members, and their attorney, if applicable.

Decisions that the medical power of attorney authorizes include:

  • Which facilities and doctors/physicians to visit
  • Which drugs and therapies to pursue
  • Tests and medical procedures
  • When and if the patient should undergo surgery
  • Whether to disconnect life support systems
  • How aggressively brain damage or disease should be handled
  • Whether to pursue quality and comfort of life or do everything possible to extend the adult child’s life

Financial power of attorney

A financial POA allows your adult child to authorize someone to handle their financial transactions. When the adult child goes to college, a parent can become the trusted person (“agent” or “attorney-in-fact”). As their agent, you could handle tasks such as paying their bills, filing tax returns, monitoring investments, and depositing checks.

Put your mind at ease now

All parents should understand the need to create two documents: a durable medical power of attorney and a durable financial power of attorney for their adult children. I am certainly walking the walk and talking the talk: Before I send my daughter off to college, I will help her complete separate POAs for finances and medical care. Peace of mind is priceless.

Disclaimer: The information provided here is not investment, tax, or financial advice. You should consult with a licensed professional for advice concerning your specific situation.

Marguerita M. Cheng is the Chief Executive Officer at Blue Ocean Global Wealth. She is a CFP® professional, a Chartered Retirement Planning Counselor℠ and a Retirement Income Certified Professional. She helps educate the public, policymakers and media about the benefits of competent, ethical financial planning.