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The "HEMS" (health, education, maintenance, support) standard in estate planning is used to guide trustees in how/when they should release funds to a beneficiary.

The HEMS standard is used in estate planning to guide trustees in how and when they should release funds to a beneficiary. By including HEMS language in a trust, you can exert greater control over how the trust’s assets are ultimately spent and for what purpose, including health and education expenses. This can be especially useful if a trust’s beneficiary is young or financially inexperienced. A financial advisor who offers estate planning services can help you set up a trust that meets the needs of you and your beneficiaries.

What Is a HEMS Provision?

HEMS is an acronym that stands for health, education, maintenance and support. When assets are distributed to the beneficiaries of a trust with a HEMS provision, the money can only be used for specific needs tied to the beneficiaries’ health, education or living expenses. These may include college tuition, mortgage and rent payments, medical care and health insurance premiums.

Here’s a look at some examples of HEMS distributions:

HEMS Standard: A Breakdown
Health Education Maintenance and Support
Medical treatment Tuition for all levels of education Mortgage or rent
Health insurance College housing and dining Taxes
Eye exams and dental care Career training Insurance
Prescription drugs Studying abroad Customary vacations
Some elective procedures Books Gifts for family members
Gym memberships  Other support Reasonable comforts

While a HEMS provision gives a trustee guidance on how assets should be distributed (the trustee ultimately has the discretionary authority to decide whether an expense qualifies). This can be relatively straight forward when it comes to the health and education components of a HEMS provision, but the maintenance and support category can be more ambiguous. That’s because maintenance and support can include distributions that allow a beneficiary to maintain their typical standard of living, which can even include travel and vacation expenses.

Benefits of HEMS

The "HEMS" (health, education, maintenance, support) standard in estate planning is used to guide trustees in how/when they should release funds to a beneficiary.

Having a HEMS provision in your trust can be beneficial in several ways. First, by limiting what types of distributions are allowed, you’ll better ensure that the assets held in the trust are not spent frivolously. This can be especially important if the trustee is also a beneficiary. By establishing certain restrictions, the odds of the trust being drawn down too quickly diminish.

Second, by giving the trustee guidelines for how assets should be distributed to beneficiaries, you’ll make their job that much easier. A HEMS provision can narrow the vast discretionary authority that some trusts endow their trustees and can help them better preside over the entity.

Lastly, HEMS language isn’t one size fits all. It can be as specific or broad as you like. For example, you can establish a trust whose assets can only be distributed to pay college tuition or the long-term care of a sick or disabled beneficiary. Another grantor may not include such specific language and instead give the trustee broader discretion to allocate assets for any health, education, maintenance and support expenditures.

Bottom Line

The "HEMS" (health, education, maintenance, support) standard in estate planning is used to guide trustees in how/when they should release funds to a beneficiary.

The HEMS standard is used in estate planning to ensure assets in a trust pay for the health, education, maintenance and support of a beneficiary. A HEMS provision can help guide a trustee and protect assets from being spent too quickly. Common examples of expenses that warrant a HEMS distribution are college tuition and medical care, as well as mortgage or rent payments.

Estate Planning Tips

  • Estate planning can be a complicated and stressful proposition for someone without proper guidance. A financial advisor who specializes in estate planning can help you create a plan that will ensure your loved ones are taken care of when you’re gone. SmartAsset’s free tool can match you with up to three financial advisors in just five minutes. If you’re ready, get started now.
  • If you have a considerable amount of assets, it’s important to familiarize yourself with the laws surrounding estate and gift taxes. While the federal government charges both estate and gift taxes, some states have their own death taxes that you’ll want to consider while planning your estate.

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Patrick Villanova, CEPF® Patrick Villanova is a writer for SmartAsset, covering a variety of personal finance topics, including retirement and investing. Before joining SmartAsset, Patrick worked as an editor at The Jersey Journal. His work has also appeared on and in The Star-Ledger. Patrick is a graduate of the University of New Hampshire, where he studied English and developed his love of writing. In his free time, he enjoys hiking, trying out new recipes in the kitchen and watching his beloved New York sports teams. A New Jersey native, he currently lives in Jersey City.
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