Estate Planning: Considerations for Young Adult Children

October 07, 2022

While they may still be under the care of their parents, college-aged or other young adult children should have certain legal documents in place in case of emergency or incapacitation, as well as to ensure prudent management of substantial assets.

Since an 18-year-old “child” is actually a legal adult, it can be difficult for parents to access their young adult children’s medical and financial information if needed. While parents may continue to medically and financially care for their children during their early adult years, this new legal status severs the automatic access parents previously had over medical and financial records and decisions.

This change in legal status invites an important opportunity for parents to plan with their young adult children. Specifically, young adults should consider putting in place a health care proxy, durable power of attorney, and where appropriate, semi-revocable trust.

Health Care Proxy

In the event of a medical emergency, it may be necessary to have immediate access to a young adult child’s medical records and the ability to make medical decisions on their behalf. A health care proxy, created by the child and designating the parent as health care agent, will do both—grant access to the child’s medical records and authorize the parent’s ability to make urgent important decisions in the event of the child’s incapacity.

In addition, young adults attending college should complete any HIPAA authorization that their college or university requires in order to share medical information with parents, as schools may more readily provide information requested pursuant to this form.

Durable Power of Attorney

A durable power of attorney created by a child and designating the parents as agents will authorize the parents to access the child’s bank accounts and make financial decisions for the child. The term “durable” means that it is effective immediately upon signing and remains effective in the event of the child’s incapacity, thereby granting the parents immediate authority.

Should the young adult child become incapacitated or disabled, the durable power of attorney will save significant time and money otherwise required for the parents to establish the legal authority to make financial decisions on the child’s behalf and gain access to financial accounts. The durable power of attorney also authorizes the agents (parents) to transact on the child’s behalf in more common scenarios—signing leases, opening accounts, or handling investments.

Semi-Revocable Trust

If upon attaining age 18 or 21 an adult child will receive or has received substantial assets, the issue of proper management of those funds arises, as few 18- or 21-year-olds have the mental and emotional maturity to manage such assets. This situation can occur if a custodial account was created in the child’s early minor years.

Custodial accounts, while easily created under the Uniform Transfers to Minors Act or Uniform Gifts to Minors Act (collectively, UTMA accounts), can grow exponentially from the more modest initial funding amount to a substantial amount at the age of majority (18 or 21 years depending on the state). Full UTMA account funds can be accessed when the child reaches age 18 or 21. The same is true of certain irrevocable trusts called 2503(c) trusts, which receive and hold gifts for a minor child that qualify for the annual federal gift exclusion, without the minor child’s ability to withdraw any funds until attaining age 21. At age 21, the child may access the full amount, which may have grown quite large by that time.

A semi-revocable trust can establish parental control over these assets until the child has attained a more reasonable age for managing substantial assets alone. Under this arrangement, the child agrees to transfer assets from the UTMA account or 2503(c) trust account to the parent in the parent’s capacity as trustee of this new trust. As trustee, the parent should continue to manage the assets prudently, with appropriate investments and withdrawals for necessary expenses. Then, upon attaining a particular age (30 or 35, for example), the adult child would reacquire complete access to the funds.

All of these documents require the young adult child’s willingness to sign and to name their parent(s) as agent(s) or trustee(s), which may involve some discussions concerning the prudent stewardship of assets. Together, all three arrangements present a unique learning opportunity for young adults to wisely plan for their future.


If you have any questions or would like more information on the issues discussed in this Insight, please contact any of the following:

Daniel R. Cooper (Philadelphia / New York)
Emily B. Pickering (Philadelphia)
Sara A. Wells (Boston)
Laura B. Lerner (Boston)