What if Your College Kid is Sick or Has an Emergency?

If your kids need help, these are the healthcare documents you may need

Sending kids off to school in the fall has always been an important ritual that marks the changing seasons. It’s an exciting time for kids: A time for learning, social development and a growing independence. Parents are just glad to get back into familiar routines.

Nothing’s normal anymore: Be prepared with health care documents

Anxiety over COVID is forcing new conversations as kids return to college campuses this fall. At 18 or more, these students are officially adults, but they still depend on their parents for food and shelter. Parents declare them on their taxes and pay for their health care. While these kids may be testing their independence, they remain closely tied to their families.

It may seem morbid to talk about health care documents for robust young people, but accidents and illnesses happen to young adults. COVID infects every demographic, and young people are vulnerable too. Nothing is normal anymore. If your kids are away at college and something happens to them, you want to be the one making decisions for them.

 

If there’s a medical emergency with your child, these three forms will help you come to the aid of your child.

 

1. Advance Healthcare Directive

Also referred to as a Healthcare Agent or Medical Power of Attorney, a Healthcare Power of Attorney. By signing this document, you are appointing someone to act on your behalf to make medical decisions if you become incapacitated. Your agent will have access to your medical records and your permission to talk with your health care providers. In this case, your son or daughter would sign this document, giving you, as a parent, permission to act in your behalf. At California Document Preparers, we include an Advance Healthcare Directive in our Living Trust package, along with our Power of Attorney.

 

2. HIPAA (Health Insurance Portability and Accountability Act) authorization (also called a HIPAA release)

This is a more narrow document that permits healthcare providers to disclose your health information to anyone you specify. A standalone HIPAA authorization (meaning that it is not incorporated into a broader legal document like an Advance Healthcare Directive) does not have to be notarized or witnessed; however we include Notary on our form.

This document alone will often suffice for you to get information from the health care institution treating your child. In a HIPAA authorization, young adults can stipulate that they don’t want to disclose information about sex, drugs, mental health or other details that they prefer to keep private. As with the broader Advance Healthcare Directive, a HIPAA release can also be included in a Living Trust, but it is always included as a standalone document in our estate planning package to conform with particular California rules and so that your agent doesn’t have to share your Trust document just to get health care information.

3. Power of Attorney 

A Power of Attorney enables a designated agent (in this case a parent) to make financial decisions on the student’s behalf. The POA can begin immediately after signing the document or only if your child becomes incapacitated. As the designated Power of Attorney, the agent can sign tax returns, access bank accounts, pay bills, make changes to a child’s financial aid package or figure out tuition problems.

Fortunately, most families will never need these forms, but it’s always a better idea to be prepared in case you do.

What else changes at 18?

As teenagers turn 18, they’re adults according to the law. They can now vote, serve in the military and on a jury, sign a contract and get married without parental consent. They still can’t legally drink alcohol and car rental companies usually will not allow them to rent cars, but their legal status is decidedly different than it was at 17. All males with U.S. citizenship must register for the selective service upon reaching the age of 18.

 

COVID has created urgency on so many levels

As the COVID crisis drags on, many more of our clients are scheduling appointments to create or update their Living Trusts. Our Trust package includes a Pour Over Will, and for those families with children under 18, it means that they can name a Guardian rather than having the court appoint one for them. Creating a Trust helps provide some peace of mind during these uncertain times. Best of all, we guide you through it and we prepare the legal documents.

Our Trust package includes a Will, Power of Attorney, an Advance Healthcare Directive and Incapacity Planning. At California Document Preparers, for most of our services, we charge one flat fee. We’re helpful, compassionate and affordable.

We service the entire East Bay and North Bay areas

Berkeley, El Cerrito, Richmond, Pinole, Alameda, San Leandro, Castro Valley Newark, San Lorenzo, Concord, Alamo, Danville, Lafayette, Orinda, Moraga, Pleasant Hill, Martinez, Pittsburg, Antioch, Brentwood, Oakley, Discovery Bay, Pleasanton, San Ramon, Livermore, Tracy and Fremont. Our clients also live in the Napa Valley, Benicia, Vallejo, Martinez, Fairfield.

Estate Planning Includes Planning for Incapacity

We’re all uneasy as we face the biggest health challenge of our lifetimes. Despite stringent safety precautions, this remains a highly contagious disease, and we’re all feeling vulnerable. Many people are feeling the urgency to create estate planning documents.

But estate planning isn’t only about what happens after a loved one’s death

Estate planning includes making plans for incapacity—when loved ones are no longer able to care for themselves.

For my own folks, incapacity necessitated an intervention after my stepfather suffered a minor stroke while driving. He veered off the road and plowed into a police car. The good news is that we finally were able to take his keys away and get him off the road.

My brother stepped in as his Power of Attorney

As the Financial Power of Attorney for my folks, my brother was able to manage their finances. I think my stepfather was happy to be relieved of this burden, and my mother was no longer able to deal with anything substantive. Fortunately, they both still had testamentary capacity and were able to sign the necessary legal documents. My brother also became the Agent for their Advance Healthcare Directives. He now had authority to carry out their final healthcare decisions.

Mental Incapacity can be caused by an accident, injury or illness

Mental incapacity results in someone’s being incapable of making informed decisions about their finances and wellbeing.

• Without a comprehensive incapacity plan in place, a judge can appoint someone to take control of an incapacitated person’s assets and make all personal and medical decisions on that person’s behalf under a court-supervised guardianship or conservatorship.
• The incapacitated person and his or her loved ones can lose valuable time, money, and control until the incapacitated person either regains capacity or dies.

Holding assets in joint accounts with another family member is a poor solution

Many believe they’re protected if they hold their assets in joint names with another family member. While a joint account holder may be able to pay bills, for instance, a joint owner of real estate will not be able to sell property without the consent of the other owner.

If that owner is legally incapacitated, the owner will not have clear title to the property and will not be able to sell it. Only a comprehensive incapacity plan will protect you and your assets from a court-supervised guardianship or conservatorship.

During this health crisis, many are feeling an urgency to create a Living Trust 

Our Trust package includes a Will, Power of Attorney and an Advance Healthcare Directive. We guide you through the process and prepare the legal documents. At California Document Preparers, for most of our services, we charge one flat fee. We’re helpful, compassionate and affordable. Schedule an appointment today at one of our three Bay Area offices in Dublin, Walnut Creek or Oakland. 

We service the entire East Bay and North Bay areas

Berkeley, El Cerrito, Richmond, Pinole, Alameda, San Leandro, Castro Valley Newark, San Lorenzo, Concord, Alamo, Danville, Lafayette, Orinda, Moraga, Pleasant Hill, Martinez, Pittsburg, Antioch, Brentwood, Oakley, Discovery Bay, Pleasanton, San Ramon, Livermore, Tracy and Fremont. Our clients also live in the Napa Valley, Benicia, Vallejo, Martinez, Fairfield.

You, Your Trust and Taxes

We talk a lot about Living Trusts as an important part of estate planning. What we don’t talk about is a Trust and your taxes. But if you’re creating a Trust, thinking about transferring property, or naming a Successor Trustee, taxes are an important consideration. This is about your, your Trust and your taxes.

A Living Trust is typically a Revocable Trust, meaning that the person who’s creating it, the Grantor, may add or remove the Trust’s assets and beneficiaries at any time. The Grantor may even terminate or revoke the Trust at any time. Many people want to know about the tax implications of a Trust before they move forward with creating one.

The Trust is in the Grantor’s name and will be recorded in his taxes

Because the Trust is in the Grantor’s name, he remains entitled to receive the income and the principal of the Trust during his lifetime. As a result, the IRS still taxes the Grantor on the Trust’s income. Because this is still in the Grantor’s name, it uses his social security number to establish investments and bank accounts, so all of the Trust’s income is recorded on the Grantor’s tax return. It is not necessary to have a separate tax return for the Trust because everything is still in one person’s name—the Grantor’s.

Having a Trust means your heirs will avoid Probate

However, while the Grantor is taxed on the Trust income, the Trust’s assets are legally held by the Trust, which will survive the Grantor’s death. For this reason, the assets in the Trust do not need to go through the Probate process when the Grantor dies. This is one of the reasons we encourage everyone to create a Living Trust. You will be sparing your heirs the expense and the time-consuming process of going through Probate.

Special circumstances during Grantor’s life

If the Grantor becomes mentally incapacitated, the Successor Trustee designated in the Trust documents may choose to obtain a separate tax ID number for the Trust. This number is called a “Federal Tax ID Number”, an “Employer Identification Number”, or an “EIN”.

A Successor Trust may choose to obtain an EIN for the Trust in order to limit his own liability for the Trust’s income tax or to help fulfill his fiduciary duties. If the Trust is using an EIN, a separate tax return for the Trust will be required for each year. The Trust’s taxes will be filed on Form 1041 and would be filed by the same date as personal taxes. If it’s a simple estate, this may not be necessary. But even in straightforward situations, it often takes a year or more to settle the estate. There are cases where the Grantor is not incapacitated, and still may choose to establish an EIN for the Trust.

If the Grantor has complex personal taxes and would prefer not to report the income and losses of the Trust on his own tax return. He would still pay taxes on the income of the Trust but he would be paying those taxes under the Trusts EIN number.

In my own case, my parents lived into their 90s, and were active and healthy until the last year or so. We realized that there was some urgency in their signing their Trust, Powers of Attorney, Advance Healthcare Directives and Do Not Resuscitate Orders with their doctors while they still had testamentary capacity. They died within six months of each other, and my brother, the Successor Trustee, stepped up and managed their estate. It was very straightforward, but it still took more than a year to settle our parents’ estate. He established an EIN for the Trust and dealt with endless paperwork and bills that kept trickling in from Social Security, Medicare and miscellaneous providers.

Living Trust tax after Grantor’s death

After the Grantor’s death, the Trust remains in place and continues to hold legal ownership of all the Trust’s assets. If you’re the Successor Trustee, the Trust holds all of the assets that you inherit and you will be responsible for dividing among your family members, as per the Trust. The tax implications impact the outcome of both the Grantor and the beneficiaries.

• The Grantor’s final tax return is filed by the Trustee or Executor of the Grantor’s Estate, and it declares all the income earned by the Grantor through the Grantor’s death.
• However, any income earned by the Trust assets or principal after the date of the Grantor’s death is reported in a separate tax return for the Trust.

After death, the Trust converts from a Revocable to an Irrevocable Trust

The requirement that the Trust files its own tax return is a result of the Trust changing from a Revocable Trust during the Grantor’s life to an Irrevocable Trust upon the Grantor’s death. This makes perfect sense because it was Revocable before death—meaning that the Grantor can revoke, or make changes to the assets and beneficiaries. After death, of course, the Grantor can no longer make changes. The result: The Trust must file its own tax return each year.

What about estate taxes?

Thanks to changes in the estate tax laws, only those estates worth more than $11.4 million will owe federal estate taxes. This leaves most of us out, yet here in the affluent Bay Area, this extends to an increasing number of people.

California Document Preparers assists our clients in the preparation of Living Trusts. Our Living Trust portfolio includes a Power of Attorney and Advance Healthcare Directive. Most of our clients are surprised at how easy it is. Schedule an appointment today by contacting us at one of our three Bay Area offices. Our dedicated team is helpful, compassionate and affordable.

You, Your Trust and Taxes

We talk a lot about Living Trusts as an important part of estate planning. What we don’t talk about is a Trust and your taxes. But if you’re creating a Trust, thinking about transferring property, or naming a Successor Trustee, taxes are an important consideration. This is about your, your Trust and your taxes.

A Living Trust is typically a Revocable Trust, meaning that the person who’s creating it, the Grantor, may add or remove the Trust’s assets and beneficiaries at any time. The Grantor may even terminate or revoke the Trust at any time. Many people want to know about the tax implications of a Trust before they move forward with creating one.

The Trust is in the Grantor’s name and will be recorded in his taxes

Because the Trust is in the Grantor’s name, he remains entitled to receive the income and the principal of the Trust during his lifetime. As a result, the IRS still taxes the Grantor on the Trust’s income. Because this is still in the Grantor’s name, it uses his social security number to establish investments and bank accounts, so all of the Trust’s income is recorded on the Grantor’s tax return. It is not necessary to have a separate tax return for the Trust because everything is still in one person’s name—the Grantor’s.

Having a Trust means your heirs will avoid Probate

However, while the Grantor is taxed on the Trust income, the Trust’s assets are legally held by the Trust, which will survive the Grantor’s death. For this reason, the assets in the Trust do not need to go through the Probate process when the Grantor dies. This is one of the reasons we encourage everyone to create a Living Trust. You will be sparing your heirs the expense and the time-consuming process of going through Probate.

Special circumstances during Grantor’s life

If the Grantor becomes mentally incapacitated, the Successor Trustee designated in the Trust documents may choose to obtain a separate tax ID number for the Trust. This number is called a “Federal Tax ID Number”, an “Employer Identification Number”, or an “EIN”.

A Successor Trust may choose to obtain an EIN for the Trust in order to limit his own liability for the Trust’s income tax or to help fulfill his fiduciary duties. If the Trust is using an EIN, a separate tax return for the Trust will be required for each year. The Trust’s taxes will be filed on Form 1041 and would be filed by the same date as personal taxes. If it’s a simple estate, this may not be necessary. But even in straightforward situations, it often takes a year or more to settle the estate. There are cases where the Grantor is not incapacitated, and still may choose to establish an EIN for the Trust.

If the Grantor has complex personal taxes and would prefer not to report the income and losses of the Trust on his own tax return. He would still pay taxes on the income of the Trust but he would be paying those taxes under the Trusts EIN number.

In my own case, my parents lived into their 90s, and were active and healthy until the last year or so. We realized that there was some urgency in their signing their Trust, Powers of Attorney, Advance Healthcare Directives and Do Not Resuscitate Orders with their doctors while they still had testamentary capacity. They died within six months of each other, and my brother, the Successor Trustee, stepped up and managed their estate. It was very straightforward, but it still took more than a year to settle our parents’ estate. He established an EIN for the Trust and dealt with endless paperwork and bills that kept trickling in from Social Security, Medicare and miscellaneous providers.

Living Trust tax after Grantor’s death

After the Grantor’s death, the Trust remains in place and continues to hold legal ownership of all the Trust’s assets. If you’re the Successor Trustee, the Trust holds all of the assets that you inherit and you will be responsible for dividing among your family members, as per the Trust. The tax implications impact the outcome of both the Grantor and the beneficiaries.

• The Grantor’s final tax return is filed by the Trustee or Executor of the Grantor’s Estate, and it declares all the income earned by the Grantor through the Grantor’s death.
• However, any income earned by the Trust assets or principal after the date of the Grantor’s death is reported in a separate tax return for the Trust.

After death, the Trust converts from a Revocable to an Irrevocable Trust

The requirement that the Trust files its own tax return is a result of the Trust changing from a Revocable Trust during the Grantor’s life to an Irrevocable Trust upon the Grantor’s death. This makes perfect sense because it was Revocable before death—meaning that the Grantor can revoke, or make changes to the assets and beneficiaries. After death, of course, the Grantor can no longer make changes. The result: The Trust must file its own tax return each year.

What about estate taxes?

Thanks to changes in the estate tax laws, only those estates worth more than $11.4 million will owe federal estate taxes. This leaves most of us out, yet here in the affluent Bay Area, this extends to an increasing number of people.

California Document Preparers assists our clients in the preparation of Living Trusts. Our Living Trust portfolio includes a Power of Attorney and Advance Healthcare Directive. Most of our clients are surprised at how easy it is. Schedule an appointment today by contacting us at one of our three Bay Area offices. Our dedicated team is helpful, compassionate and affordable.