Key Takeaways:
What this may mean for you:
In your eyes, your child will always be “your child,” no matter what their age, but in the eyes of the law, that “child” is legally an adult on their 18th birthday. This seemingly minor change in nomenclature can have a major impact if not carefully planned for. Without having certain documents in place on their 18th birthday, you will have no access to their medical, financial, or academic records. Furthermore, in the unanticipated situation where your child is incapable of making decisions on their own, you will be barred from making them on their behalf. This can present a unique set of challenges if your child is away at college. Planning for these and other issues that may arise is key to avoiding the various pitfalls that you and your children may face.
How does the law view your child now that they are 18?
The “age of majority” – Once your child hits a certain age (usually 18), they have reached the “age of majority.” This means, as far as the law is concerned, he or she is an adult, and information regarding their health, finances, and education will not be disclosed to anyone without their written consent.
What can be done? – Certain legal documents must be put in place to designate you as your child’s legal representative.
What documents should you consider having in place on your child’s 18th birthday?
Uniform Gifts to Minors Act (UGMA) and Uniform Transfers to Minors Act (UTMA) accounts
UGMA and UTMA accounts are custodial accounts set up for minors that can hold cash, investments, and, in some cases, collectables. These accounts are controlled by a custodian, usually the parent. Depending on state law, when the child attains age 18 or 21, he or she assumes control of the account. If the child is not ready to manage the assets, or would simply benefit from your assistance, the child must make that election with the financial institution holding the account.
Beyond the legal requirements
Dealing with the legal aspect, of course, is just part of this journey for you and your child. Turning 18 is an important milestone and an opportunity for you to engage in meaningful conversations about your hopes and wishes as well as getting an idea of your child’s dreams.
Making sure you have the legal documents described above will give you access to important information, but, ideally, much of this information will come via speaking with your child. If your child will be away from home, discussing how much contact and what method will vary by child. It’ll also be a time for your child to stretch their wings and build their own experiences. Some may discover that their initial choice, whether it be college or career, may not be right for them, or they may not be making the most of the experience. This is an opportunity for you to coach them on being accountable as well as finding their own path. Whether your child is nearing their 18th birthday or has already crossed that threshold, consider the steps outlined above to help you both be prepared for the exciting road ahead.
Disclosures
Wells Fargo Wealth Management and Wells Fargo Private Bank provide products and services through Wells Fargo Bank, N.A. and its various affiliates and subsidiaries. Wells Fargo Bank, N.A. is a bank affiliate of Wells Fargo & Company.
Brokerage services are offered through Wells Fargo Advisors. Wells Fargo Advisors is a trade name used by Wells Fargo Clearing Services, LLC and Wells Fargo Advisors Financial Network, LLC, Members SIPC, separate registered broker-dealers and non-bank affiliates of Wells Fargo & Company.
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Wells Fargo Bank, N.A. (the “bank”) offers various advisory and fiduciary products and services, including discretionary portfolio management. Financial Advisors of Wells Fargo Advisors may refer clients to the bank for an ongoing or one-time fee. The role of the Financial Advisor with respect to bank products and services is limited to referral and relationship management services. The bank is responsible for the day-to-day management of non-brokerage accounts and for providing investment advice, investment management services, and wealth management services to clients. The Financial Advisor does not provide investment advice or brokerage services to bank accounts but does offer, as applicable, brokerage services and investment advice to brokerage accounts held at Wells Fargo Advisors. The views, opinions, and portfolios may differ from our broker-dealer affiliates.
Wells Fargo & Company and its affiliates do not provide legal or tax advice. Please consult your legal and/or tax advisors to determine how this information may apply to your own situation. Whether any planned tax result is realized by you depends on the specific facts of your own situation at the time your tax return is filed.
Any estate plan should be prepared and reviewed by an attorney who specializes in estate planning and is licensed to practice estate law in your state.
This document has been created for informational purposes only, is subject to change, is not all encompassing, and is not a solicitation or an offer to buy any security or instrument or to participate in any planning, trading, or distribution strategies. Information has been obtained from sources believed to be reliable, but its accuracy and completeness are not guaranteed.
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