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HEMS: Health, Education, Maintenance and Support. What is it?

It is a little surprising that there is not a lot of guidance on what the phrase health, education, maintenance, and support (HEMS) really means. This phrase appears in nearly every trust written in the United States. HEMS is an IRS approved phrase for tax reasons and has been adopted by the legal profession to cover reasonable limits on trust distributions. In short, it means you can have it if you need it.
                                                                                                                                                          Attorneys generally agree that maintenance and support include accustomed living expenses such as mortgage payments, property taxes, insurance payments, utility payments, vacations, and similar situations.
                                                                                                                                                          But what if I always wanted to visit Paris but my spouse refused to go? Typically HEMS could pay for the trip if it was within the life style that a couple lived. HEMS doesn’t really attempt to reduce your style of living and if a spouse has passed on, the survivor can still live within the accustomed life style even if the actual activities are a little different than before.
                                                                                                                                                                                                                                                                                                                        Many trusts will impose another condition which is “the trustee shall consider other resources” before a HEMS distribution can be made. That means that if you have plenty of your own resources then spend them first before taking HEMS distributions from your spouse’s trust.
                                                                                                                                                              The question of how much can be distributed under HEMS depends upon the total of all trust provisions, the intent of the trust, the character, condition, and circumstances of the beneficiary. No set sum applies to all cases as each case is as different as you and your neighbors. The station in life of the beneficiary as well as information on reasonable expenses sets the amount.
                                                                                                                                                           Suppose your spouse was a miser and left $10,000,000 in trust for you. Must you now continue to live a miser’s life style? There is not much guidance in this situation and reference to life style is not helpful. Personally, I think an increased lifestyle would be in order, but that’s just me.