College Pandemic Estate Planning

My niece is headed back to New Hampshire for her sophomore year of college, but it will not be business as usual. For college students in a pandemic, this year will require flexibility, resilience, and patience, not to mention good health and some luck. In her case, she will attend “live” classes every other quarter and other quarters will be remote, but she has chosen to move back to campus for all quarters to access extracurriculars, university resources, and some social life. Due to social distancing requirements, dorm space this year is limited. Fortunately, a hotel which lacked regular customers opted to become a long-term housing solution for local students. Instant single!

She is by no means unique; while every institution is answering this challenge differently, no student will have a normal year. As a financial planner, this brings to mind all kinds of questions. What would happen if she got sick and needed a significant medical intervention? What happens if she is sick for weeks and can’t pay her bills or take care of her banking needs?

Estate planning is not just for people with property and children to protect. Every adult should have several basic documents, especially in a time when the future is unpredictable. This is even more critical if your young adult has chronic health conditions or other medical challenges. 

If, like my niece, your college student will attend school out of state, they should sign Powers of Attorney valid in both states. This can save lots of trouble at a time when that’s the last thing you need. 

At a minimum, students headed off the couch and back to school should complete these following documents: 

Last Will and Testament  

This document explains who gets a student’s assets and who will have to pay any outstanding debts. Not all young adults need a will, but a will is particularly important if the student owns a car or has inherited or amassed financial resources in their own name. Has the student managed to collect valuable musical instruments or other collectibles? They should be included as well. Wills can also be important if parents have divorced and communication over the child’s estate would be difficult. 

In a will, the student should make specific bequests of their prized possessions, and they should also designate an executor who will ensure their wishes are followed. In California, wills must be witnessed by two adults over 18 who are not receiving anything in the will (but there is no requirement for notarized signatures). Many states have different requirements you will want to be aware of. 

A note on debts: federal student loans are forgiven if a student dies, but private loans often are not. Private loans and other debts (credit card debt, car loans, etc.) go through the same probate process as debt in any other estate.

Durable Power of Attorney (POA) for Healthcare, with a HIPAA Release and a Living Will 

Together, these documents are known as an advance directive. A medical power of attorney allows your child to name an agent (like their parent), who can make healthcare decisions for them if they’re incapacitated and cannot make such decisions for themselves. Without these forms, if a college student is hospitalized and unconscious, doctors have no obligation to follow the parents’ wishes. This is true even if the student is still covered by the parents’ medical insurance policy. And without a HIPAA release, a parent calling for an update will likely be met with pushback if she asks for information on her child’s condition–medical records are sealed away from parents who don’t have a proper release. The student’s Living Will allows them to state their wishes about extreme medical interventions, artificial life support, pain medication, etc. You can download your state’s Advance Health Care Directive language here.

Students should store their health care documents with their health insurance card and any other medical information in a safe place. It’s a good idea to share this location with a trusted friend on campus who can assist parents and doctors in an emergency. Parents should keep their own copies of the documents as well, preferably stored as digital documents in cloud storage, so they are available on a moment’s notice wherever parents happen to be. 

Durable Power of Attorney (POA) for Finances

This document lets students designate someone to have access to their bank accounts, pay their bills, and keep them out of financial trouble while they recover from an illness or injury. This Power of Attorney also comes in handy post-pandemic when the student wants to take a gap year away from home or study overseas. Financial POA language for your state can be found online, but we recommend consulting with an estate attorney to make sure the language is up to date and legally enforceable. 

One other document to consider is a FERPA waiver.  Due to this 1974 law, “student academic information such as grades or academic standing (GPA, academic transcript, academic warning, academic probation, or discipline records) will be given to the student and not to the parents.” This could be a problem if a student gets sick or has a debilitating accident in the middle of a term. Most colleges have a FERPA waiver form the student can sign, allowing their parents to request access to academic information and grades. Taking these few steps can help you and your college student feel more in control and less worried about the upcoming year.

Abacus has many other great resources on estate planning topics, so feel free to reach out to an Abacus advisor for more information.


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