HEMS is an acronym that stands for "health, education, maintenance, or support" that is frequently used in trusts to help guide the trustee in making distributions to the beneficiaries of the trust.
The HEMS ascertainable standard is an important power for your trustee to utilize while trust assets are held in trust for the benefit of the beneficiary. The standard allows enough flexibility that a trustee has some discretion to do what is in the beneficiary’s best interest given the state of the trusts’ income and/or remaining assets. The trustee can distribute funds immediately to fund a HEMS expense regardless if they were set to be distributed at a future date.
MyAdvocate provides the ability to select items that you would like your trustees to consider providing for your beneficiaries as part of their “health, education, maintenance, or support (HEMS):
Following are some examples of the types of expenses that the HEMS standards might include:
Health
_____ All items below, as well as any other items the trustee, in their discretion, deems to be necessary for the health of the beneficiary, or
Select individual items:
_____ healthcare, dental, vision insurance premiums, and deductibles
_____ eye care, glasses, contact lenses, vision correction surgery
_____ regular medical treatments, checkups, and exams
_____ allergen services
_____ restorative cosmetic surgeries
_____ alternative therapeutic medical treatments (e.g., acupuncture, massage therapy, etc.)
_____ substance abuse rehabilitation programs
_____ vacations or retreats to improve mental health
_____ health-related home improvements or renovations
_____ home health care or long-term care
_____ health clubs, gym, spa, golf club memberships
_____ exercise equipment
_____ healthcare supplements
_____ mental health counseling & treatments
_____ handicap-related equipment, transport and mobility services
_____ Other _____________________________________________________________
__________________________________________________________________
__________________________________________________________________
Education
_____ All items below, as well as any other items the trustee, in their discretion, deems to be necessary for the education of the beneficiary, or
Select individual items:
_____ tuition for all levels of public or private schools
_____ graduate or professional degrees including medical school, law school, etc.
_____ study-abroad programs and related travel expenses
_____ a beneficiary’s support between semesters or during unpaid internships
_____ school-related expenses including room, board, books, computer, uniforms etc.
_____ private tutoring
_____ extracurricular activities related to the education experience
_____ certification and graduation costs
_____ career counseling and training
_____ daycare for dependents to allow a parent time to attend classes and study
_____ Other _____________________________________________________________
__________________________________________________________________
__________________________________________________________________
Maintenance and Support
_____ All items below, as well as any other items the trustee, in their discretion, deems to be necessary for the maintenance or support of the beneficiary, or
Select individual items:
_____ rent or mortgage payments or subsidy to live near work or school
_____ down payment on a home
_____ study-abroad programs and related travel expenses
_____ living expenses and support for a beneficiary engaged in charitable work or low-income vocations that provide social and community benefits
_____ insurance premiums including life, auto, disability, or homeowner’s policies
_____ vehicles and related repairs and maintenance
_____ continuation of family gifting for birthdays, weddings, holidays, baby showers, etc.
_____ travel for family events (funerals, support, weddings, etc.)
_____ legal fees
_____ continuation of typical family vacations
_____ home repair and maintenance
_____ mobile phone service and equipment
_____ utility bills, such as electricity, water, television, internet, streaming etc.
_____ seed money to start a business
_____ Other _____________________________________________________________
__________________________________________________________________
__________________________________________________________________
The examples above are only some of the expenses that can commonly be justified under the HEMS standard. A trustee must exercise consistency and defensible justification when making distributions to demonstrate to potential lawsuit plaintiffs, the IRS, and judges that the HEMS standard is preventing the beneficiary from having complete control over the trust property.
Trustees should keep good records on any distributions and the reason for those distributions.