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Ten Financial Moves to Make When Your Child Turns 18

The day your child turns 18, he or she becomes a legal adult, with many new rights and responsibilities. While there are certain ways to help get them started on ensuring their financial future, there are also rights that you as a parent lose when your child reaches aduthood, like guaranteed access to their medical records. If you have a child nearing the age of 18, here are a few critical things to watch out for:

  1. Open a Bank Account
    If the child does not already have a checking or savings account, it’s time to open one. If you add yourself as a joint account owner, you can monitor their balances and add money as needed – and it will almost certainly be needed.
  2. Apply for a Credit Card
    On the other hand, having a credit card without a parent on the account is a good way to start building credit. In addition to giving the child access to funds and teaching them some measure of fiscal responsibility, it can also be useful in cases of emergency. You can set up automatic monthly transfers from the child’s checking account to ensure that the payments are made when needed.
  3. Order a Credit Report
    Your child probably won’t have much of a credit history prior to turning 18, but minor children can be a target for identity thieves. So it’s worth making sure that nothing inadvertent or fraudulent has been connected to his or her Social Security number. You can get a free credit report from each of the three major credit reporting agencies at
  4. Financial Literacy 101
    Providing your 18-year-old with a crash course in finance will likely benefit them in the long run. Topics you could discuss include following a monthly budget, managing their debt and starting to save for retirement early on in an IRA or 401(k). Your child may also start signing contracts, such as apartment leases – be sure they understand the implications of such agreements.
  5. Update Their Insurance
    Talk with your insurance agent about having your child’s vehicle insurance switched to their name, in order to limit your asset exposure. A significant accident on your own policy could end up costing you dearly.   
  6. Watch Out for Account Changes
    If your child has a Uniform Gift to Minors Act (UGMA) or Uniform Transfer to Minors Act (UTMA) account on their behalf, those assets will typically become theirs between the ages of 18 and 21, depending on their state or territory of residence. Talk to your estate attorney or Baird Financial Advisor about how to deal with the transfer of those assets.
  7. Obtain a HIPAA Release
    Because of the Health Insurance Portability and Accountability Act (HIPAA), health care providers are not legally permitted to disclose an adult’s medical record or even discuss their health status, even if that adult is still on your health insurance plan. But your adult child can sign a HIPAA medical information release form to give you access to such information.
  8. Sign a Health Care Proxy and Power of Attorney
    Once your child reaches age 18, you can no longer make decisions for them, even if they’re incapacitated, unless they have signed a health care proxy. Similarly, a durable power of attorney authorizes you to manage your child’s finances in the event that they are unable to make decisions themselves. It also lets you act on their behalf when he or she is unavailable to do things such as sign a lease while they’re studying abroad, for instance.
  9. Sign a FERPA Waiver
    The Family Educational Rights and Privacy Act allows anyone 18 or older to limit access to their academic records. Having your child sign a FERPA release waives these rights, although access to things like report cards can also be granted if you claim the student as a dependent for tax purposes.
  10. Create a Will
    Finally, it’s not pleasant to consider, but if your child does not have a will, any assets they own could become subject to probate. In most states, the assets of an unmarried child with no descendants will pass to his or her parents, but if your child has a more complex situation, such as involving a trust, a will would definitely be appropriate.

Having a child turn 18 is a critical milestone for both you and them. Make sure the future is protected for both of you by checking in with your Baird Financial Advisor team for guidance.

The information reflected on this page are Baird expert opinions today and are subject to change. The information provided here has not taken into consideration the investment goals or needs of any specific investor and investors should not make any investment decisions based solely on this information. Past performance is not a guarantee of future results. All investments have some level of risk, and investors have different time horizons, goals and risk tolerances, so speak to your Baird Financial Advisor before taking action.