Why Advisors Should Have ‘Legal Checklist’ Conversations with Parents of Teens

As parents navigate the teenage years, their concerns evolve from managing schoolwork and extracurricular activities to preparing their children for adulthood. For financial advisors working with families, this is an ideal time to bring up the importance of ensuring that their clients’ legal planning is as comprehensive as their financial planning.

While many advisors focus on financial matters like savings, investments, and college funds, there’s a growing recognition that estate planning and legal preparedness for the future of children—particularly teens—deserve just as much attention. Here’s why advisors should initiate “Legal Checklist” conversations with parents of teens:

1. Transitioning Legal Rights at Age 18

At age 18, teens are considered legal adults. This transition comes with significant legal responsibilities and changes, especially when it comes to healthcare, finances, and decision-making. Many parents assume that they will still have the same rights to make decisions for their child once they turn 18, but this isn’t the case. Advisors should encourage parents to discuss and implement key legal documents, including:

• Power of Attorney: This document grants parents or trusted individuals the authority to make financial or legal decisions on behalf of their child if they become incapacitated. Without it, parents might be denied access to their teen’s financial accounts, even in emergencies.
• Healthcare Proxy/Medical Power of Attorney: While parents often have healthcare decision-making power while their children are minors, this authority ends at age 18. A healthcare proxy ensures that parents can make medical decisions if their child is unable to do so.
• HIPAA Authorization: Without this document, parents may not be able to access their teen’s medical records, even if they’re still providing financial support.

Having these documents in place ensures a smooth transition for parents, preventing potential legal complications in an emergency.

2. Planning for Financial Independence

As teens become more financially independent—through part-time jobs, scholarships, or college savings—they may begin to manage their own bank accounts and credit. Advisors can help parents discuss the importance of setting up:

• Joint Bank Accounts: For ease of access and to teach teens financial responsibility, advisors might recommend parents set up joint accounts. This ensures that parents have the ability to monitor the account and intervene if necessary, while also giving teens a sense of independence.
• Estate Planning Documents for Teens: Advisors can also help guide families in thinking about how to include their teen children in estate planning conversations. While teens might not own significant assets yet, having a will in place—even a simple one—can help prevent disputes in the future.

3. Preparing for College and Beyond

For many families, the college years are a time when children begin to assert their independence and parents want to ensure their child’s legal affairs are in order. This includes discussions about:

• Guardianship: If a child is going away to college, especially out of state, parents should consider what happens in the event of an emergency or accident. Establishing guardianship or understanding what the law says about decision-making in these situations can bring peace of mind.
• Living Wills or Advance Directives: These documents outline a teen’s medical wishes should they become incapacitated. While not common for every teen, it can be beneficial, especially for those heading off to college or traveling abroad.

4. Protecting Against Legal Pitfalls

Teens are often more vulnerable to legal challenges, especially in the digital age. Cyberbullying, contract disputes (e.g., signing up for services online), or issues around student loans or debts can quickly turn into legal problems. Advisors can help parents prepare for these potential pitfalls by:

• Contract Review and Education: Advisors can point parents toward resources that will help their teens understand contracts they sign (such as mobile phone plans, subscription services, or leases for apartments).
• Insurance: Ensuring that teens are properly insured is another critical area. From car insurance to renters’ insurance, the right coverage can help protect them—and their parents—from liability.

5. Engaging in a Meaningful Conversation

As an advisor, opening up a dialogue about legal preparedness can help strengthen relationships with clients, allowing you to become a trusted resource not just for financial planning but also for family planning. When clients are aware that their advisors are looking out for their family’s complete well-being, they’re more likely to turn to you for guidance in the future.

To initiate this conversation, advisors can include a simple checklist in their client communications or bring it up during financial planning meetings. A few key discussion points to bring up could include:

• Do your children have the appropriate estate planning documents (e.g., power of attorney, healthcare proxy)?
• Have you discussed guardianship and living wills with your teen, especially if they are heading off to college?
• Are there legal documents or planning strategies that could help your family avoid future conflicts or challenges?

Advisors have an opportunity to go beyond financial advice and assist parents in navigating their teen’s transition into adulthood. By having regular “Legal Checklist” conversations, advisors can help families establish a solid legal foundation that works alongside their financial plan, ensuring peace of mind during these transformative years.

Parents may not always realize how important these conversations are, but by guiding them through the process, advisors can solidify their role as trusted partners in all aspects of family planning.