When children turn 18: What now?
When our children reach 18, we don’t stop being their parents. And although the relationship changes, they’re still dependent on us. How can we help them become financially responsible and thrive as young adults?
In this audiocast, we’ll talk about the importance of starting early and talking often. We’ll share a story about a family who wasn’t quite prepared for issues that came up while the child was away at college. We’ll offer helpful tips on being smart about credit cards, online banking and social media. And we’ll discuss ways you can plan for the unexpected.
Jesse Mandell, Senior Vice President, on the strategy team at Bank of America Private Bank, is joined by Wealth Strategist Chris Courtnage, Private Client Advisor Tamara O’Connor and Wealth Strategies Analyst Bria Singletary, who’ll explore some challenges parents and those turning 18 may face.

External Audiocast for Bank of America Private Bank: (6.24.20)
Title: When children turn 18: What now?
Moderator:
Jesse Mandell (Strategy for Business Owners and Families)
Speakers:
Christine Courtnage (Wealth Strategy)
Tamara O’Connor (PCA)
Bria Singletary (Wealth Strategies Analyst)
CALL SCRIPT
Operator: Thank you for joining today’s Bank of America Private Bank call on “When Children turn 18: What now? The views and opinions expressed are those of the presenters as of June 24, 2020, are subject to change without notice and may differ from views expressed by Bank of America Corporation or its affiliates. This is presented for informational purposes only and should not be used or construed as a recommendation of any service, security, or sector. Please listen to the end of the call for important disclosures. I will now turn the call over to Jesse Mandell…please go ahead.
***
Jesse: Hi, everybody. I’m Jesse Mandell on the strategy team at Bank of America Private Bank.
A great conversation today, especially for those of you who have family members turning 18, or who will in a few years.
Jesse: While a parent’s personal relationship will likely remain unchanged, the legal relationship does change. The good news is that there are ways to make this transition seamless, and it’s never too early or late to start. Today, we’ll:
highlight a few stories to help you coach your loved ones for what lies ahead
provide some tips you can share with your children on how to handle credit cards, online banking and social media, and
recommend a helpful checklist to guide you through these and other financial conversations
I’m here with my colleagues from across the country: Chris Courtnage, Wealth Strategist in Chicago; Tamara O’Connor, Private Client Advisor in Dallas; and Bria Singletary, Wealth Strategies Analyst in New York to start the conversation on how to guide you in your conversations with children and grandchildren, as they begin new chapter in their lives.
So let’s begin: Tamara, other than a child claiming greater independence from his or her parents, what’s important about turning 18?
Tamara: Jesse, thanks so much for bringing us all together today. Let me start with a story. A client’s 18-year-old daughter was a college freshman, and one night, the daughter’s roommate called our client to let her know that her daughter had been in an accident and was in the emergency room.
Jesse: I can’t even imagine.
Tamara: I know, right? The mother immediately called the hospital, but they wouldn’t give her any information – not even a confirmation that her daughter was actually there and this mother tried everything and got nowhere.
The reason for this and a lot of other changes at 18 is it’s the age of majority in 47 states and the District of Columbia which means a child legally becomes an adult. Therefore the parents’ role as natural guardian, with the ability to make decisions for that child -- ends. As a result, the child and parents need to take steps to allow the parents to remain involved in the child’s affairs. It’s so important to be prepared for the unexpected.
Jesse: That makes so much sense. But I feel all the individual pieces that go into it just aren’t on people’s radar the way they should be. I know when I turned 18, they certainly weren’t for me and my parents.
That story you shared about the college freshman sure got my attention. What was behind that medical situation, and why couldn’t the mother get the information on her daughter?
Tamara: It sure got my attention too, Jesse. The Health Insurance Portability and Accountability Act called (HIPAA) is the federal law that restricts medical professionals from disclosing medical information without an adult’s consent. For a parent to be able to help in a time of need, there are three important legal documents for an adult child to have in place: a HIPAA release form, a health care power of attorney, and an advanced directive or living will. And that’s just for physical health. When we think about preserving a new adult’s financial health, there are a few more things to do. For example, it’s important that the 18-year-old sign a power of attorney for property. This will cover the situation where a parent needs to act on behalf of the child because a child cannot do so themselves, perhaps because the child is traveling or otherwise unavailable. In addition, if the child has
accumulated any wealth or property, the child may need to have a will.
Jesse: Thank you, Tamara. Having all that together when a child reaches 18 sounds like a really good plan so that everyone is prepared.
Let’s bring Chris into the conversation. I know you’ve been guiding families on these specific issues for most of your career. What other areas should parents prepare their children or grandchildren for when they are about to turn 18? Things like credit cards, contracts…
Chris One of my colleagues told me how, during a college event, there was a table set up with merchandise, and some friendly faces behind it greeting new students. They explained that if you filled out a credit card application, you’d get a free t-shirt. So he did. He didn’t really intend to use the card, but a few things came up, and when the bill came in, he was shocked by how much it added up to. He was too embarrassed to tell his parents, so he got a job to pay it off. Just think what could have happened if he had thrown the bills away, which is something I’ve unfortunately heard has happened in other situations. If the bills do go unpaid for too long, the student could suffer from a bad credit rating, which will linger and take time to clear.
Jesse Mmm I hear you. I knew people who put their first spring break trip on a credit card and they’re still paying for it at graduations.
Chris: And yes, the moral to this story is that no matter how grown up the young person seems to be, parents should not assume that they have a full grasp of contracts and what it means to take on the
responsibility of credit. It’s important that family members talk about any type of contract, whether it’s a credit card, an apartment lease, military recruitment agreement or other commitment with their children so that they don’t unknowingly enter into a contract they don’t understand.
Jesse: Thank you Chris. I have friends who have older teenagers and one of the things suggested to them years ago was to open up a Uniform Transfers to Minors Account often referred to as (UTMA). Now that their child has turned 17, I’m wondering if this was a good idea. Do they just have to hand it over to him when he reaches 18?
Tamara: Jesse, as to the first part of the question, UTMAs, are one of the most common ways to set up savings for minors, often for educational purposes. However, many families find that by the time the child is ready for college, the family may have other resources and doesn’t need the UTMA funds for schooling. Instead, the account has become a wealth transfer account.
The second part of your question is about when the child will get those funds and whether the parent will have any further control over them, right?
Jesse: Exactly.
Tamara: This is a good time to revisit why the account was set up in the first place and what it is worth today. UTMAs terminate at ages ranging from 18-25, and are not tied to the state’s age of majority. Most states use the age of 21, but you should check yours.
Chris: Tamara, let me share a little about another family. The parents set up an UTMA for their son. It’s grown to about $300,000 dollars in stock. Since the son was about to turn 18, we reviewed the account with the father and determined that it could continue until the son reaches age 21. The parents have set aside other funds to cover their son’s college costs so the UTMA funds are not needed immediately. The father decided that this would be a good opportunity to provide a learning experience for the son. The son opened a self-directed investment account to learn about the markets and begin to invest.
The son is learning about investing with an eye towards his future goal of starting a business. He is learning about budgeting and goal setting. The father has the opportunity to see how the son handles his finances with an eye towards his future inheritance. It has also created an open dialog between father and son. And, our advisors are here to provide them both with resources to help meet their needs.
If the parents were more concerned about the impact the money would have on their son, there are a few things that they could have considered:
Before the account terminates, the custodian (who’s usually a parent or family member) could use the funds to cover other expenses for the child, such as for education.
They might also suggest to the child that the child create a revocable living trust with the parent as a co-trustee with the child, giving the child a longer time to learn about investing and budgeting.
Jesse: I love that teachable moment Chris. This time of life provides such a unique opportunity to share values around legacy, and educate the next generation. We do so much of that and help families if they haven’t had experiences with these conversations or are looking for materials, experts or guidance.
Uh, what are the other types of accounts we get questions on are trusts. Many of our clients have created trusts for their children or grandchildren.
Does the beneficiary turning 18 impact a trust?
Tamara: Good question Jesse; we get that one a lot. Most trusts are designed to last beyond a beneficiary’s 18th birthday. The terms of the trust may require that the trust terminate when the beneficiary reaches a specific age, but in most cases today, trusts last much longer, even for multiple generations. Now just because a trust lasts for a longer period of time, doesn’t mean that the beneficiary can be kept in the dark about the existence and operation of the trust. State laws determine whether and when a beneficiary has to be informed of a trust.
Jesse: You know, you make a really good point and our trust officers spend a lot of time educating beneficiaries about their responsibilities when it comes to trusts. We even have a whole section in our financial empowerment curriculum available to help young people learn more and guide those conversations.
Tamara: Exactly! In that section, we explain that in order to be the best steward of the trust assets, the beneficiary should be educated as to
why the trust was created, what access the beneficiary has to income and principal, and whether or not the beneficiary has any control over the disposition of the trust assets. Much like Chris’ story on the UTMA, a trust can also be used as an educational opportunity for the beneficiary to learn about budgeting, investing and family legacy.
Our financial empowerment curriculum also provides young adults other financial education, such as how to think about their first paycheck, kicking off a savings plan and making informed decisions on life events. We’ve recently made all our materials cell phone friendly, which of course means millennial friendly. They can also be easily delivered over Webex until we can meet in person.
Jesse: Thanks so much Tamara. Bria, and also thank you for joining us today. I am curious what your thoughts are and what you’ve been finding in your conversations with clients and their children.
Bria Thanks Jesse for having me. What comes to mind immediately when thinking about this time in life is that we need to help make sure that a young adult understands the responsibility of money and making wise financial decisions.
Simplifying the process by which we equip the next generation with key personal finance knowledge is essential. Let’s take our cell phones for a moment, I don’t know how many phone pickups a day you have…
Jesse: Ahh, no comment, um, alright I’m down 11% since last week! I’m going to call that a win.
Bria: That’s probably a good thing and check it next week and see if you can keep on track there. Either way, cell phones are part of our day-to-day functioning, and serve as an assistant in so many ways. A key way to getting through the preconceived notion that finance is difficult to comprehend and explain, is by making sure that the content is shared with young adults in a way that is consistent with their natural habits. When introducing personal finance, highlighting the capabilities of personal finance tools, some of which are embedded within the Bank of America mobile app, can enhance the conversation and overall experience. For instance, the Budgeting and Savings Tool allows you to analyze spending habits by category and helps you hit your personal finance goals by updating them on your savings progress. The look and feel is user friendly and a critical component in simplifying this process. Since we are discussing our app, did you know that by the middle of 2019, 8.4 million Bank of America clients sent and received 163 million transactions using Zelle?* That’s $18 billion dollars sent directly and securely from one bank account to another in real time.
Jesse: Wow, that’s a lot. I didn’t know that Bria, we keep adding enhancements there so thank you for mentioning the Bank’s digital payments capabilities. What about social media? Chris, what should parents and young people be thinking about, some of the best practices to follow?
Chris: For so many young people, they’ve been using social media their entire lives. But you have to talk about the benefits and risks of social media at this time of their life. There are three aspects I’ll speak to:
First, most young adults use online apps, such as the Bank of America app for banking, spending and investing. The benefit is that it’s easy for them to manage their finances. They can review their transactions in real time. To reduce the risk that somebody can steal their information, they should choose strong passwords and change them frequently. With the Bank of America app they can also set reminders, recurring bill payments, (umm) monitor their FICO score and benefit from many account security features. And also send payments like we talked about earlier with Zelle. We also have the one app, to securely access banking and investments accounts, move money and pay bills.
Second, they should be concerned with privacy and personal security issues. Being careful not to post travel plans, where they’ll be and when. And they should guard personal information from scammers and hackers.
And third, they should be protective of their social media reputation. This will be important to them as they finish school and start their job search. Recruiters almost universally will search a candidate’s social media for both negative and positive elements.
Jesse: Thanks Chris, you’re absolutely right about the app and
the value of managing one’s online reputation. So this is one for the group, can anyone share some examples you’ve seen of where and what’s posted and how it could either help or hurt?
Tamara: I can. Over 42% of surveyed recruiters indicated that they have not pursued a candidate based on social media posts reflecting risky behavior, such as drugs and underage or excessive drinking. Also posts that are contrary to an employer’s work place diversity standards. Another negative, is if the social media post contradict information from an interview or resume.
On the positive side, media posts might show creativity or communication skills attractive to an employer. And, it never occurred to me that having NO social media presence would be a negative, but actually 57% of recruiters skipped over an applicant because they couldn’t find the candidate online.
Bria: Tamara brought up an excellent point regarding social media.
Another thing to think about is, do your kids think about their “brand” and “curating?”
Studies have shown, such as the Society of HR Management that at least 84% of organizations engage in social media recruiting to find candidates. This number is likely to increase within the near future especially, due to the current climate. So now that we've raised some of the concerns with social media and ways that people should go about protecting their brand and I thought it was necessary to point out that social media can be used as a tool to bolster one’s reputation if leveraged correctly.
As we continue to see an increase in the numbers of organizations using social media as a recruitment tool, it’s important to make sure that clients are sharing personal content in a way that makes them
more marketable for jobs within their field. By including content that highlights some of the activities or leadership roles they have participated in over the years, they build a visual resume in a sense. Particularly, emphasizing participation in connection to community outreach and professional development can be helpful as long as it feels organic and coincides with the tone of their social media pages in general.
Jesse: You’re absolutely right, I have become so much more focused on what I post and where. And they’re some helpful tools that come to mind on best practices for our clients to use with their families.
Chris: And Jesse, one good place to start for a wider discussion of this topic is in a new guide (that acts like a checklist) that we recently released and it’s called, “Your child is turning 18. Now what?” Bank of America Private Bank has other materials for mentoring children and resources for young adults. In particular, reach out to your Private Bank team for links to our online, interactive Financial Empowerment Program that we previously mentioned. It includes over 30 topics to help your child build a solid financial foundation.
Bria:
I recently completed a Financial Empowerment overview and training for a client’s daughter who reached out to our team to have a conversation because she was concerned about her level of financial savviness and wanted to be prepared for an upcoming summer internship within the financial services sector. During this conversation, not only were we able to provide practical knowledge surrounding banking, savings, and credit, we were able to foster a
genuine connection leading to a very fruitful interaction for both the client’s daughter and the team. By the end of the call, we reiterated that this could be an iterative learning opportunity and that we would be more than happy to help her continue to develop her knowledge on other financial topics, such as investments. In addition to answering her financial questions as she begins her professional career, we felt fortunate to hear some of her thoughts and ideas on the future of the financial sector and the role that technology will play. It’s important that we know how we can best help young adults.
Jesse: Thank you everyone. Great conversation and back to that idea regarding life transitions as teachable moments. Not only for the parents and children but also for us as a bank and our ability to help there.
I want to thank Chris, Bria and Tamara and all of you on the phone for taking time to join us.
We hope the insights we shared are helpful as you continue to take care of your loved ones. We have content on our private bank website including our financial empowerment program you can access, and set up time to discuss further, so encourage you to reach out to your advisors. Know that we are here for you and your family to help provide solutions and resources to support and guide you and your whole family in overall financial planning and well-being.
This concludes our conversation today, thank you.
Operator: All information is as of June 24, 2020. Opinions are those of the presenters and subject to change.
Bank of America Private Bank is a division of Bank of America, N.A., Member FDIC and a wholly owned subsidiary of Bank of America Corporation.
Bank of America, N.A., and U.S. Trust Company of Delaware (collectively the “Bank”) do not serve in a fiduciary capacity with respect to all products or services. Fiduciary standards or fiduciary duties do not apply, for example, when the Bank is offering or providing credit solutions, banking, custody or brokerage products/services or referrals to other affiliates of the Bank.
Neither Bank of America Private Bank nor any of its affiliates or advisors provide legal, tax or accounting advice. You should consult your legal and/or tax advisors before making any
financial decisions.
© 2020 Bank of America Corporation. All rights reserved.
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*Source: Bank of America Newsroom
https://newsroom.bankofamerica.com/pressreleases/consumer-banking/bank-america-zeller-use-soars-2019
What parents can do
- Be an effective “coach” to your child
- Prepare your child for new responsibilities
- Take steps to stay involved in your child’s affairs
Documents to have in place
- Health care power of attorney
- Health Insurance Portability and Accountability Act (HIPAA) release form
- Advanced directive or living will
Types of contracts to talk about
- Credit card
- Apartment lease
- Automobile purchase or rental document