The views expressed are those of Anchor Capital Advisors, LLC (“Anchor”) and are subject to change at any time. They are based on our proprietary research and general knowledge of said topic. The below content and applicable data are in support of our views on said topic. Please see additional disclosures at the end of this publication.
Introduction
As we approach summer and high school graduation season, it is important to think about all the things that come next for your child.
Adulthood brings both legal independence and responsibility. Your child can sign contracts, make medical decisions, and manage their finances on their own. However, they also lose a valuable safety net: parents and guardians no longer have the automatic authority to speak for them. If something goes wrong, like a sudden illness or an accident, or they go on a long trip, others may need to act or speak for your child. Without the right documents, they may not be able to.
Three simple tools cover most of this risk: a durable power of attorney, a health care proxy, and a HIPAA authorization. Alone, each serves a distinct role. Together, they create a clear, workable plan.
Durable Power of Attorney: Who Can Act For you
Once your child turns 18, their finances are private and you lose the automatic ability to act for them. [1] Without express authorization, you will be unable to help make legal and financial decisions for your child if they are unable to, such as when they are traveling abroad or if they get into an accident.
A durable power of attorney (DPOA) allows your child to grant someone (the “agent”) the legal authority to act for them in non-medical matters. [2] The power should be durable, which means the powers granted continue even if they become incapacitated. Without it, their family may have to go to court for permission to act.
Anyone creating a DPOA should consider naming a backup agent (or two) so more than one person can potentially act for you. Whomever you choose should know that they have been named and where they can find the documents if they need to use them.
Health Care Proxy: Who Decides Medical Care
As with financial and legal decisions, you may not be able to assist with your child’s medical care once they turn 18. While your child is healthy, this isn’t an issue—they can always consult you or bring you along to any appointments. However, if they get sick or in an accident that results in incapacity, you may not be able to make medical decisions without express authorization.
A health care proxy names the person who can make medical decisions if they cannot. [3] When choices involve values—life support or pain management—someone needs authority to decide. Choose someone who can stay calm, listen, and respect your child’s wishes.
Signing a health care proxy puts a plan in place before something bad happens. If you wait to act until your child needs someone to decide for them, you may have to spend valuable time and money to get court authorization to ensure your child gets the care they need.
Each state varies as to the legal requirements for a valid health care proxy. If your child is moving out-of-state to attend college, it is good practice to also have a health care proxy that complies with the laws of that state.
HIPPA Authorization: Who Can Receive Information
Once your child is an adult, their medical information is theirs. Medical privacy laws restrict what doctors can share. [4] Even if they are still on your health insurance plan, you only have a limited view of their medical care, and typically only after the fact.
A HIPAA authorization allows specific people to receive updates and speak with doctors. It does not grant decision-making power. These are often used in conjunction with a health care proxy but are much broader in scope. For example, a HIPAA authorization can be granted to several people at once and does not depend on the child becoming incapacitated for it to be in effect.
You can have an authorization granted by an attorney. However, each medical provider may also have their own preferred form. For convenience and expediency, you should check with your normal medical providers to get their preferred forms on file as soon as practicable. Having both a general authorization as well as a provider-specific form will help cover most contingencies. [5]
Digital Life: Password Management and Digital Assets
Much of modern life is online: banking, school, work, insurance, and photos. To help keep track of your or your child’s online life, you may consider a password manager. To protect against uncertainty, you may also consider creating a digital assets inventory, ensure that your legal documents (including a DPOA) specifically grant authority to handle digital assets, and understand the terms of service for all your digital assets. Some company policies will override your legal documents, so understand if you need to specifically grant authorization to your digital accounts through the provider. [6]
Password managers store encrypted logins and can include emergency access features. Digital assets include email, cloud files, financial accounts, and social media. A simple plan ensures accounts are not locked or lost.
Bottom Line
These documents are designed to work together:
• HIPAA authorization allows information to flow.
• Health care proxy allows decisions to be made.
• Durable power of attorney allows practical tasks to be handled.
Legal documents are about clarity, not complexity.
These steps take a few hours and can prevent wasting significant time and money later.
[1] For example, see Mass. Gen. Laws ch. 4, § 7 and Mass. Gen. Laws ch. 231, § 85P.
[2] For Massachusetts law, see Mass. Gen. Laws ch. 190B, § 5-501.
[3] For Massachusetts law, see Mass. Gen. Laws ch. 201D.
[4] https://www.hhs.gov/hipaa/for-individuals/index.html
[5] See https://www.masslegalservices.org/content/hipaa-compliant-release-form-allow-others-see-your-medical-records-and-protected-health for an example of an authorization form.
[6] For example, some states have passed the Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA), which specifically addresses this issue. Massachusetts has not adopted this statute.
The views expressed are those of Anchor Capital Advisors, LLC (”Anchor”) as of the date written and are subject to change at any time. Anchor does not undertake any obligation to update the information contained herein as of any future date, nor does it have liability for decisions based on this information. Certain information (including any forward-looking statements and economic and market information) has been obtained from sources we deem reliable, but is not guaranteed by Anchor, nor is it a complete summary of available data. This publication has been prepared by Anchor Capital Advisors, LLC (Anchor). The information is for educational purposes only and should not be considered investment advice or a recommendation of any particular strategy or investment product. These opinions are not intended to be a forecast of future events or a guarantee of future results. No part of this document may be reproduced in any form, or referred to in any other publication, without express written permission of Anchor. Past performance is not guarantee of future results. Inherent in any investment is the possibility of loss. The benchmark returns include in reinvestment of income. Time-weighted portfolio returns are calculated for each monthly period in the prior quarter. Quarterly results are linked to determine annual returns. Individual client portfolio results may vary from the results presented for the model because of different investment objectives, tax status and other considerations. Returns of individual client accounts will be reduced by advisor fees and other expenses which might be incurred to provide investment management, custody, administrative, actuarial, accounting or other services to the client. A complete list of each security that contributed to performance is available upon request.