The most important part of a young person's estate plan

Advisers should push young clients, or clients with young-adult children, to get powers of attorney governing health care and financial assets

Aug 3, 2016 @ 11:00 am

By Greg Iacurci

Young clients, even the millennial children of older clients, probably don't spring to mind as necessary recipients of estate-planning advice.

After all, young adults are likely enrolled in college or are early on in their working careers, and haven't amassed much in financial assets.

However, there are some universal estate-planning strategies advisers should apply to young people, no matter their financial situation. The most important, advisers say, is establishing a medical power of attorney.

Every adult at least 18 years old should create one, Richard Behrendt, the director of estate planning at Annex Wealth Management, said.

Prior to age 18, a child's parents and guardians are able to make medical decisions on their behalf, but becoming an adult severs those parental and guardianship rights. In the case of a medical emergency, in which a young person is incapacitated and unable to make a decision regarding treatment, parents may not be able to access medical records or make health care decisions without a durable power of attorney for health care, Mr. Behrendt said.

The POA establishes an agent to step into the “principal's” shoes and make decisions on their behalf.

“We never think it's going to happen to us. But the problem is it happens to somebody,” Charlie Douglas, board member of the National Association of Estate Planners and Councils and an Atlanta-based wealth adviser, said.

Absent a power of attorney, a court may be the one to step in and make a decision as to who that agent is.

This week, news emerged that Anton Yelchin, a 27-year-old actor well-known for his portrayal of Pavel Chekov in the “Star Trek” film reboot, had died without a will. His parents had to file in Los Angeles Superior Court to be administrators of their son's $1.4 million estate.

And, it doesn't have to be a difficult or expensive proposition. For example, the private, nonprofit organization called Aging With Dignity offers access to a document, called Five Wishes, online that serves as an advance medical directive, Mr. Behrendt said. It's meant for the elderly, but any adult can use it, and is recognized in more than 40 states.

Some states also have their own health care POAs at state health departments, Mr. Behrendt added.

At a minimum, young adults should have a power of attorney for health care and one that governs financial assets, Mr. Douglas said. The financial POA determines who can access financial accounts, such as 401(k) plans and individual retirement accounts.

“You do those to have a voice ahead of time, because if you don't do it ahead of time the court has to appoint a guardian, a personal representative, and that may not be the person that you want,” Mr. Douglas said.

Further, establishing a will becomes important for a young person upon the birth of a child, according to Mr. Behrendt. In the case of premature death on the part of both parents, a court would intervene to determine a legal guardian for a child who's a minor, absent a will.

“You don't want it be your boorish, derelict brother-in-law. It's too important. You don't want to leave it up to chance,” Mr. Behrendt said.

“Advisers want to tell younger clients and parents of younger adult children, this is why you have to have at least the basics,” Mr. Behrendt said, speaking of the different powers of attorney. “And, if they have minor children, at least a will.”


What do you think?

View comments

Recommended for you

Featured video


Advisers beware: tax law has unintended consequences

Commission accounts could be preferable for some clients, and advisers could be incentivized to move from employee broker-dealers to independent channels.

Recommended Video

Path to growth

Latest news & opinion

Morgan Stanley reports a loss of advisers after exiting the protocol for broker recruiting

The firm said it lost 47 brokers in the fourth quarter, the most in any quarter of 2017.

Morgan Stanley's wealth management fees climb to all-time high

Improvement reflect firm's shift of more clients into fee-based accounts priced on asset levels, which boosts results as markets rise.

Legislation would make it harder for investors to sue mutual funds over high fees

A plaintiff would have to state in their initial complaint why fiduciary duty was breached, and then prove the violation with 'clear and convincing evidence.'

Relying on trainees, Merrill Lynch boosts adviser headcount in 2017

Questions remain about long-term effectiveness of wirehouse's move away from recruiting experienced brokers.

Supreme Court review of SEC judges could roil pending cases

But long-term, the agency may get around questions of constitutionality by changing the way it brings on administrative law judges.


Hi! Glad you're here and we hope you like all the great work we do here at InvestmentNews. But what we do is expensive and is funded in part by our sponsors. So won't you show our sponsors a little love by whitelisting It'll help us continue to serve you.

Yes, show me how to whitelist

Ad blocker detected. Please whitelist us or give premium a try.


Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print