Steps to Take as Your Child Heads Off to College

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Congratulations, your child is off to college! Give yourself a pat on the back or a high five… you did it! He or she is now on the path to adulthood, paving their own way for their future. However, your work isn’t really done (is it ever?).

During this transition, parents are often paying for their children’s tuition and living expenses while trying to instill financial independence and budgeting skills from afar.

Additionally, once your child turns 18, they are legally considered an adult and you lose all authority and control over making financial and medical decisions for your child.

Sending your child off to college is typically met with mixed emotions. To help ease your fears or anxieties, we’ve put together a few suggested topics to discuss with your teen before they leave in the fall.

Have a discussion about personal finance and budgeting

As your child prepares for college, it is often the perfect time to start (or deepen) your conversations about money. Many personal financial milestones begin at this age. For example, your child might get a credit or debit card for the first time in college. Discuss the basics and make sure they know how to develop a budget and understand how and when to use a debit card and a credit card responsibly. If you plan to have your child cover some of their own expenses, such as entertainment, communicate what you plan to pay for (and not pay for) before they go to college. Be thorough when discussing finances with your child, as they may have misconceptions of how some things work. Helping your child lay a firm foundation with personal financial knowledge before leaving the nest is a great way to encourage financial independence.

Have a Power of Attorney on file

If your children[1] have their own credit cards, bank accounts, student loans or other debt payments, it is important to have a power of attorney on file. This would allow a parent to access their child’s financial records and assist in making financial decisions if the child cannot make or communicate decisions, perhaps due to illness. If the child is incapacitated, cannot be located, or needs assistance for any reason, the parent would also be able to gain access to the child’s cell phone or other records, which may be critical in locating or helping the child.

We generally recommend formally establishing a power of attorney on your children’s accounts instead of owning financial accounts jointly with your children. Please consult your tax professional and/or attorney for specifics on how this may impact you.

Have your child sign a health care proxy and/or medical directive

In addition, it is also very important to have your child sign a health care proxy and/or medical directive. Once your child turns 18, you are no longer legally allowed to make decisions for them regarding their medical care, and will not have access to their medical records, absent a legal document or court order. Getting the requisite legal documents in place now allows you to avoid the potential expense, hassle, and time delay of obtaining a court order.

If your child plans to attend college in a state outside your family’s residence state, it is recommended to have the required legal documents in place for both states. Doing so will reduce the possibility of the legal document done in the home state not being recognized in the state in which your child goes to college, or vice versa. Unfortunately, accidents do happen, and these essential documents will ensure that you will be there to help your child through an injury by making critical medical decisions for them when they are unable to do so themselves.

Consider liability exposures

Finally, consider the liability exposures to your (and your child’s) financial position when you have a college-aged child. Consult with your attorney before purchasing real estate in your name where your child will live by themselves or with other roommates and update your personal liability coverage to ensure adequate coverage against any potential lawsuit.

Most homeowners policies will offer some coverage for students away at school. If your child is a full-time student and a dependent in your household, your homeowners policy should automatically extend some coverage to a new dorm location. Things get trickier when living off-campus. If your child is housed outside of the school dorm, you need to be sure to list the new location specifically on your homeowners policy to protect you and your child (especially if you have co-signed a lease) or obtain a separate renter’s insurance policy for your child. Generally, a homeowners policy will also provide up to 10% of your personal property coverage limit to cover your child’s belongings at a college location, subject to the policy deductible. It is important to note the internal policy limits for jewelry, sports equipment, and electronic devices as these are the items most often stolen on college campuses.

While you might be tempted to remove your college-bound child from your auto policy while they are away at school without a vehicle, in order to save on premiums, this is often not the best decision, as the nominal cost savings is not worth the protection you would lose. Keeping your child insured on your personal auto policy will allow your child to drive your cars when returning home, maintain liability coverage as a driver while operating a friend’s vehicle at school, and will protect your child if they are struck by an uninsured motorist while walking or cycling. Additional discounts are available to students who maintain a 3.0-grade point average and/or are over 100 miles away from home, further reducing insurance costs.


There are numerous decisions to be made while preparing your child for college. Thoughtful preparation and open communication can help ease some of your fears or anxieties. This is an exciting time and it’s important you and your child feel prepared for the next life phase for both of you!

To learn more about Freestone and how we help our clients with topics that fall outside of investment allocation or planning, we encourage you to reach out to learn more.

About Freestone :

[1]For the purposes of this paper, the terms “children” and “child” refer to young adults heading to college, generally around ages 18-20.

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Important Disclosures: Nothing in this article is intended to provide, and you should not rely upon it for, accounting, legal, tax or investment advice or recommendations. We are not making any specific recommendations regarding any financial planning or tax planning strategy, and you should not make any financial planning or tax planning decisions based on the information in this article. The intention   of this article is educational, and it is intended only to discuss a few limited aspects of complex planning strategies. This article is not a comprehensive or complete summary of considerations regarding its subject matter. Each individual is in a different situation and has different items to address, and the options in this article are not appropriate for everyone. Please consult your Freestone client advisor and a professional tax advisor regarding options specific to your needs.

Posted By: Andrew Erisman, CIMA®

Andrew Erisman, CIMA®, is a client advisor and Partner at Freestone. For over 30 years, he has helped successful individuals and families navigate the complexities associated with wealth. He works closely with his clients, developing a deep understanding of their goals and concerns so they can feel comfortable with their financial decisions. Andrew & his wife Stacy split time between Bellevue and Leavenworth, and are adjusting to life as “empty-nesters”.