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Marc A. Hebert's Money Sense: High school graduates have estate planning needs to consider

By MARC A. HEBERT
June 24. 2016 7:47PM


WHILE RECENT high school graduates are usually focusing on heading off to college or acquiring employment, there are several personal finance issues they will need to focus on. One of the most overlooked areas is estate planning. Many people think estate planning is for elderly individuals, but if you are an adult over the age of 18, you need to have estate planning documents in place. It is important to remember that in most states, parents are unable to make health-care decisions or manage their child's assets after they turn 18.

To help you focus on the important parts of the estate planning process, we will review some of the most common segments of estate planning for high school graduates.

If an adult experiences a medical emergency and is unable to make their own health-care decisions, then the durable power of attorney for health care, or health-care proxy, is the document doctors look for to determine who is eligible to make health-care decisions on behalf of the patient. Without a health-care proxy, a parent might also be unable to learn about the medical condition of their child due to privacy laws. Accidents and illnesses do happen, so make sure your high school graduate has this document in place.

Often included along with the health-care proxy document is the living will. This document spells out an individual's wishes for medical treatment if they are unable to communicate during terminal illness or permanent unconsciousness. Two of the most important questions this document addresses are: should life sustaining treatment be started, and should the patient be medically administered nutrition and hydration?

Another important document is the durable power of attorney for finances. This document allows an individual to appoint someone, known as the agent, to manage their finances and property at any time, or only in the event they become incapacitated if the individual wishes to restrict the power.

Since health-care proxies and durable power of attorney for financial matters are state specific, it might be a prudent decision to have another set of documents from another state if the high school graduate is living in that state to attend college. Make sure to have these documents in place in order to avoid the hassle of having a court appoint guardians should a decision need to be made.

Most people know that a will reflects an individual's intentions for the disposition of assets upon death. If the high school graduate is likely to own property, then a will should be part of the estate planning package.

If the new graduate plans on joining the workforce after high school, then they might participate in an employer sponsored retirement plan. Even if they chose to go to college first, many young adults have bank accounts and some even have brokerage accounts and individual retirement accounts. Regardless of the type of financial account, it is important that beneficiaries are designated on the account. The beneficiaries are the individuals who the account passes to should the account owner die. Make sure to always name both primary and contingent beneficiaries.

Believe it or not, this also might be the time to obtain life insurance coverage. The proceeds from an insurance policy could be used to pay student loans, other outstanding debt, medical bills and funeral costs in the event of death.

As you can now see, if your estate planning is properly done, your wishes will be carried out and the burdens eased on you and those closest to you.

Marc A. Hebert, M.S., CFP, is a senior member and president of the wealth management and financial planning firm The Harbor Group of Bedford. Email questions to Marc at mhebert@harborgroup.com. Your question and his response might appear in a future column.


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