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5 Essential Legal Documents and Accounts Every College Student Should Have
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With high school graduation in the rearview mirror and the exciting new world of college up ahead, there’s so much to plan for! From enrolling in classes to purchasing dorm room necessities, you and your child will be caught up in a whirlwind of decision-making.
There’s one particular part of preparing for college that many parents overlook: the legal forms and documents that your children will need.
Parents are used to taking care of their kids, and helping them navigate medical and financial decisions is a force of habit by the time they graduate high school. But when your child reaches legal adulthood, the dynamic shifts. They’ll be responsible for so much more, from budgeting a trip to the grocery store to scheduling their own doctor appointments. This is just the beginning of what it means to become an adult.
That said, the transition doesn’t have to happen overnight – and both you and your child may want to stretch it out and give your child time to adjust. These essential documents and accounts can help smooth the transition to independence so your child can focus on their studies while staying safe.
What Legal Documents Do College Students Need?
There are three major legal documents that college students will want to set up once they hit their eighteenth birthday: a general durable power of attorney, an advance medical directive, and a HIPAA authorization.
We recommend setting these up with a qualified, trusted trust and estate attorney. While there are free online resources available for some of these, a document that isn’t established correctly may not provide everything you need in case of an emergency.
1. General Durable Power of Attorney
A power of attorney for a college student helps smooth your child’s transition to adulthood. This document allows someone to act on their behalf legally, granting broad powers to make financial decisions when issues or opportunities arise. For example, if your child were to get sick, become incapacitated, be the victim of fraud or identity theft, or is otherwise unable to act on their own. It can also be particularly helpful if your child plans to travel internationally or study abroad, for things like accessing their bank accounts to send funds or securing housing for their return.
One thing for your child to consider when granting you power of attorney is that, in conjunction with a FERPA release, it allows parents to communicate with their school and access their grades. Consider being transparent about this and setting boundaries around when or if you will check up on them in this way.
2. Advance Medical Directive
Nobody wants to think about their child needing an advance medical directive, but the fact of the matter is: unintentional injuries are the leading cause of death in young adults. Having this document in place can give you peace of mind in the event of an emergency.
If your child is in an accident, the advance medical directive designates an individual (such as yourself) to make any medical decisions on behalf of your child if they are unable to communicate with a medical team or make decisions on their own.
3. HIPAA Authorization
Under HIPAA laws, a doctor can’t share details about your child’s medical information, status, or treatment with you – unless your child has authorized them to do so.
HIPAA authorization designates who can give and receive medical information on behalf of another person. This document often goes hand in hand with an advance medical directive, so be sure to include it when you draw up the legal documents for the directive.
How to Have a Conversation with Your College Kid
Legal forms for college kids can be a tough subject to broach when your child is excited to spread their wings. They may be hesitant to allow you access if they think you’ll snoop on their grades, make medical decisions for them against their will, and so on.
Open up the door to communication and let them decide what level of involvement you will have in their care as they head toward independence. Make sure they understand that the dynamic has changed now that they’re a legal adult, and these legal documents are a safeguard for emergencies.
When discussing these legal documents with your college student, work together to establish:
- What is the intent of these documents?
- When are they necessary?
If you set boundaries with your child – such as promising to only step in during emergencies – it may help you maintain that relationship of trust with your child. Just because you have access does not mean you have to use it.
What Financial Accounts Do College Students Need?
Once you have legal documents for college students in place, it’s time to turn your attention to getting them set up for their financial future. Here are the most important accounts that they will need before leaving home.
4. Checking and Savings Accounts
Most young adults already have checking, savings, or both by this point in their lives, but if not, it’s time to get their accounts set up. This gives them financial autonomy to access their money and practice managing funds responsibly.
When shopping for an account that your child can use long-term, consider what the account will cost. Minimum balances, monthly fees, and ATM fees should all be taken into consideration when looking at where to open up an account. Unexpected fees that your child forgets about could lead to overdrawn accounts, so make sure they understand what it costs to bank.
Alternatively, you could open a joint account if you plan to transfer money to them frequently for rent, groceries, and other expenses. Some parents may also be able to share banking perks from their accounts such as waived monthly fees and ATM fee reimbursement.
5. Credit Cards
Encourage your child to start building credit early. By getting a credit card freshman year – or even sooner – they’ll have four years of credit history by the time they graduate. This opens the door to help them qualify for an apartment lease or car loan upon graduation. Credit cards marketed toward students are more likely to extend credit to individuals without an existing credit history.
Before your child signs up for their first credit card, make sure they understand the basics of managing debt and accruing interest. Emphasize the importance of not spending more than they have so that they can pay off the full balance each month.
If they don’t plan to use the card regularly, they may want to use it for a small recurring subscription that gets automatically paid off each month. This strategy ensures the card stays active and shows consistent payments made on time.
Another way to boost a child’s credit is by adding them as an authorized user to one of your credit cards with a strong history of on-time payments. Just be sure that you don’t overspend on your card, since it will show up as a high utilization rate for them too. When adding authorized users, consider setting ground rules on what they can actually charge to your card and how much.
Finally, talk to them about when to use a credit card over a debit card – especially as it relates to cybersecurity. For example, it’s generally best to make online purchases with a credit card, since you can get those reversed in case of fraud. With debit card purchases, that money leaves your account right away and may be difficult to recover.
What’s the Money For?
Crossing the t’s and dotting the i’s on the logistics of your child’s college plan is absolutely essential – but don’t forget to take some time to talk with your child about why it all matters.
From setting up legal forms for your college kid and opening bank accounts for them, involve your young adult in every part of the process. Talk to them about family values, purpose, and the meaning behind these accounts and legal documents. Even long before college, there are age-appropriate ways to talk to your children about finances and set a foundation for financial health down the road.
This can help them get to the heart of the issue: what is the money really for? What are their own values and how do they apply when looking at overall spending and saving?
Understanding some of these tenets of financial independence helps them make healthier decisions as they step into the next phase of their life. It also lets them know that you will be there for them if and when they need a helping hand or answers to financial questions. This sets the stage for a collaborative conversation about money as part of your legacy planning.
Plan a Bright Future for You and Your Family
Watching your children leave the nest and go off to college is an emotional time – and adds yet another piece of complexity to your busy life and financial plan. Many parents aren’t just thinking about paying for college. You might also be thinking ahead to your business exit strategy, retirement plan, and the charitable legacy you want to leave behind.
Sitting down with people who listen can help you see the bigger picture and gain clarity on the best path forward. At Monument Wealth Management, our team of creative problem-solvers knows how to dig into your portfolio and situation, analyze your goals, and help you craft a tailor-made plan to make those goals a reality. See if we’re a fit in 30 seconds!
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