Who Do You Represent?
A quick caution for those preparing powers of attorney for college-bound students
The term “helicopter parent” has grown in popularity over the last 10-15 years (if not more). You may have heard stories about parents accompanying their children to job interviews, attempting to control the lives of their college student under the entitlement of paying tuition, and otherwise engaging in courses of conduct which fail to recognize the differentiation between parent and adult child.
I bring these up not to judge, as both parent and child tend to have (what they believe to be) compelling arguments for and against this type of behavior. Sometimes this lack of differentiation is not the parent’s choice, but instead is the child’s choice. There are better arbiters of this conduct than I am, and there are remedies available, as in the case cited above where the student obtained a restraining order against her parents.
Instead, my objective is to encourage you not to get yourself in trouble as a professional advisor in a situation where helicopter parenting can be involved. We are often cautioned about the ethics of undue influence, especially where a younger child or caretaker may nefariously gain control of an older individual’s financial affairs. Yet, we often fail to consider the opposite - undue influence of a parent or guardian over an adult child - as this influence is often assumed and culturally accepted.
Regardless of your feelings for or against this type of influence, I predict that it will become a central theme in many trust and estate disputes in the coming years. For now, however, I want to call out this influence in one seemingly-innocuous practice that is often promoted by estate planners and financial advisors:
The preparation of powers of attorney for adult children heading off to college.
It is the time of year where I see articles hitting the newswire which encourage this type of planning. I am not here to take a binary view, nor to say it is a bad idea. Instead, this article is about approaching this planning situation with caution and considering this question - who do I represent?
Intergenerational Conflicts of Interest
Imagine, if you will, a situation where a parent approaches you to request medical and financial powers of attorney for their college-bound child. The parent names themselves as agent or attorney-in-fact, and convinces their child to execute the documents. Then, the parent takes any number of abusive or invasive actions under the power of attorney, such as freezing a child’s spending, finding out about a student’s private on-campus medical care (such as prescribed contraceptives or mental health appointments), terminating a child’s lease, etc.
Your gut reaction may be to consider these as fringe cases with a low probability, but practically every estate or fiduciary dispute has this fringe appearance at first glance. And, if the worst happens, how does this reflect on you as the drafter or promoter of this strategy? There is a potential and inherent conflict of interest when powers of attorney are not the child’s choice or idea. So, it is helpful to consider whether this conflict can be avoided or waived.
Getting Into the Weeds
The choice of the adult child controls. This is the one core tenet of professional conduct you should consider before preparing powers of attorney for a college-bound child, especially if (1) your client relationship has traditionally been with the child’s parents and (2) the parents are requesting these documents. Before engaging in this planning, it can be helpful to sit down with the adult child one-on-one (without their parents or guardians present) and walk through some of these questions:
Do you want to have someone who can make medical or financial decisions for you?
If so, when should those decisions be made, and who should make them?
Are you OK with your parent(s) or guardian(s) making these decisions?
If not, who would you choose as an alternate or backup, and do you trust this person?
Do you understand how powers of attorney function?
Do you understand that this document can be changed or revoked by you? (Perhaps explain how to do so.)
Do you understand that you can control who has access to this document?
Depending on the child’s responses, you may need to consider a much more customized power of attorney than you may use as your standard form. This could include limitations on powers granted, limitations on parties with whom the agent can interact, limitations on when the agent’s authority kicks in, and perhaps even the equivalent of two-factor authentication (where a party dealing with the agent must first contact the adult child to get permission to speak with the agent).
Conclusion
I expect that this will be a controversial subject for many readers. But, as professional advisors, our goal is to look out for the best interests of our clients, while understanding that clients in different generations can have differentiated “best” interests. I am not advocating that we question the decisions of parents - parents get enough criticism as it is. But, once a parent’s legal duty ends, we can no longer rely on this duty when it comes to unilateral preparation of legal documents.