Stepping into Adulthood: Planning Needs for Young Adults

By Phoebe Stone, JD, MA (Bioethics)

Young people who have recently reached the age of majority may not yet be established financially or professionally, and many may be immature and naive. In the eyes of the law, however, they are considered adults. Adulthood, often marked by the 18th birthday, can represent a huge shift in family dynamics. It is a significant milestone in the social and emotional life of a family because adulthood represents independence. It is often the age when children move away from home to pursue postsecondary education (i.e., anything after high school) or live apart from their families for the first time. Departure for college and/or reaching the age of majority are also legally significant milestones because when these events occur in the lives of young adults, they become responsible for many of their own financial and healthcare decisions. Young adults who have reached the age of majority are protected by various privacy laws in areas where parents or guardians were once responsible for making decisions for them and were granted open access to information. 

Often, young adults have a sense of invulnerability; rarely do they (or their families) pause to consider their estate planning needs. However, their planning needs are real. Young adulthood is generally marked by excitement, exploration, educational pursuits, career pursuits, social engagements, and general busyness, but time and space must be made for planning. Once children reach the age of majority, regardless of their financial circumstances, they should have documents that preserve family access to information (if desired) and address the possibilities of their incapacity or untimely death. This is necessary because their parents and guardians no longer have automatic rights to intervene, access information, or make decisions on their behalf under the laws in most states. 

Which Privacy Rules Apply?

After reaching the age of majority, the young adult is now able to enjoy the majority of the rights and privileges (and suffer the obligations) of other legal adults. This includes having various privacy rights and the ability to exercise independence in financial matters. Thus, if a young adult (or any adult) becomes incapacitated, no one else has the legal authority to access their finances or to make healthcare decisions on their behalf—at least not without obtaining such authority from a court via a legal proceeding generally known as a conservatorship or guardianship proceeding. These proceedings are generally expensive, invasive, time-consuming, and public—and avoidable through planning.

The federal Health Information Portability and Accountability Act (HIPAA) of 1996 protects individually identifiable health information and generally prohibits healthcare providers from disclosing this information to anyone else, absent the individual’s consent. Although certain exceptions are carved out, many of them are administrative in nature. There is an exception allowing disclosure of health information to notify family about an individual’s location, general condition, or death, but nothing in the exception explicitly permits sharing specific, detailed health information of a young adult (or any adult) with concerned family members absent expressed consent. There are civil and criminal penalties for violations, including potentially steep fines and imprisonment. 

In addition, the federal Family Educational Rights and Privacy Act (FERPA) applies to protect the privacy of student records, initially giving parents certain rights. However, these rights transfer to students once a young adult attends a postsecondary educational institution, regardless of whether they have reached the age of majority. FERPA applies to all schools that receive funds from the Department of Education (which includes almost all colleges and universities in the United States) and protects the privacy of educational records, including student grades, academic standing information, disciplinary events, and information related to a student’s treatment at a campus health center. 

It is important to note that privacy protections provided under federal laws such as HIPAA and FERPA and any related state laws apply regardless of whether the young adult is still on their family’s health insurance. Thus, an interplay of state laws and federal laws could prevent families from learning important details about the health and well-being of young adults or efficiently taking over management of their financial and health affairs in the tragic event of incapacity—unless planning is implemented in advance.

What Planning Is Needed for Young Adults? 

The typical estate plan encompasses planning for the possibility of incapacity and the eventuality of death. This generally requires various estate planning tools, including wills and/or revocable living trusts, financial powers of attorney, health-related documents, and nominations of guardianship for minor children. While each of these documents serve a particular purpose in a foundational estate plan for most clients, not all of them are necessary for a young adult. For example, few 18-year-olds are parents, and therefore, few young adults need a nomination of guardianship for minor children. In addition, few young adults have enough financial assets that probate avoidance via the use of trusts is necessary, especially given the availability of abbreviated probate proceedings for small estates in most jurisdictions. However, for young adults, health-related documents and financial powers of attorney are absolutely essential, FERPA-related waivers may be desirable for access to information about both health and academic performance, and wills may be advisable. 

Health-Related Documents 

A primary concern of young adults and their families is ensuring that parents and loved ones are able to get detailed information about the young adult’s welfare, consult with care providers, and provide input about treatment if the young adult were to be severely injured or become seriously ill. In order to protect access to information for their loved ones, young adults who have reached the age of majority should complete HIPAA release authorization forms, which permit the free flow of otherwise protected health information between healthcare providers and those persons nominated on the HIPAA release. Nominated persons (e.g., parents) and the young adults themselves should . . . 

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