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2023 College-Bound Planning: Key Financial and Health Care Decisions


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Departing for college is a major life event, marking an exciting milestone for your family and a significant step toward your child’s independence. 

By the time they enter college, most students will be 18, resulting in an array of new legal rights for the young adult — but, critically, the loss of many decision-making rights of parents. During this period of transition, planning is key to success in the academic year and beyond. 

Personal Financial Management 

In most states parents lose the right to manage their student’s money when the student turns 18 — even if the parent is paying their college tuition.

It is important to establish a durable power of attorney for property for two primary reasons. First, doing so authorizes parents to manage the student’s finances, acting on their behalf, in the event that they were to become incapacitated and unable to make decisions themselves.

Second, a durable power of attorney for property also gives parents the right to act on a student’s behalf when the student is, for instance, traveling abroad, and sign documents such as tax returns or leases on their behalf while the student is away at school. Note that the laws governing powers of attorney vary from state to state, and the powers of attorney should be executed in the state that the student is attending school in order to ensure all aspects are respected by the state.

Health Care Decisions

Similarly, at age 18, one becomes their own sole health care advocate, representative and obligor. This means that parents do not have the health-care decision making power or access to medical information that they had when the students were minors. In practice, this primarily necessitates two essential steps.

First, it is critical to establish health care power of attorney for students. This legal document names the parent as “medical agent” for the student and, in the event that the student were to become medically incapacitated, gives the parent authorization to make medical decisions on their behalf. Many parents are surprised to learn that, even if the student is on the parents’ medical insurance, care providers will not take the parent’s direction without health care power of attorney. Crucially, in order for parents to access students’ medical records, the power of attorney must include a HIPAA (Health Insurance Portability and Accountability Act) waiver. Again, many are unaware that, barring this waiver, HIPAA may prevent the sharing of unauthorized medical information, including medical status — even with parents.

Second, it is important to establish a living will, or advance directive, in order to establish directives for medical care in the event that the student were to become incapacitated. For instance, the directive can convey the student’s wishes for life-sustaining measures if they could no longer make such decisions themselves.

While it can be difficult to discuss issues surrounding powers of attorney and living wills, ultimately these discussions should facilitate peace of mind and alleviate anxiety, as families can have confidence that they have taken all available steps to prepare for a medical or mental health emergency.

Northern Trust has worked with many families to assist in this period of transition. For a comprehensive discussion of these and other key topics for college-bound freshmen — including paying for college (as well as changes brought on by the SECURE 2.0 Act), personal safety, and insurance needs — speak with your Northern Trust advisor to request our College-Bound Planning Checklist. 


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This information is not intended to be and should not be treated as legal, investment, accounting or tax advice and is for informational purposes only. Readers, including professionals, should under no circumstances rely upon this information as a substitute for their own research or for obtaining specific legal, accounting or tax advice from their own counsel. All information discussed herein is current only as of the date appearing in this material and is subject to change at any time without notice.

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