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What Is HEMS Standard, and Why Is It Important?

What is the HEMS Standard in a Trust?

Trusts are a method of protecting both your legacy and your loved ones—including their access to funds for health care and education. 

The HEMS (Health, Education, Maintenance, and Support) Standard enables your trustee to make distribution decisions based on the health, education, maintenance, and support of the recipient. Its main purpose is to enable you to provide younger beneficiaries with the support they need until they can manage their funds themselves. 

If you have significant savings or assets and want to give your children the best outcome possible, consider including a HEMS standard in your trust. Contact us today and our experienced team at The TGQ Law Firm can help with all your estate planning questions.

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Can You Leave Money for Education Under the HEMS Standard?

The ‘Education’ portion of the HEMS standard usually covers any and all forms of education, including:

  • All levels of schooling, including K-12, professional, technical school, college, and graduate school
  • Expenses associated with continuing education, such as housing, dining, and books during college
  • Expenses for school-related programs
  • Continued support even during educational breaks such as summer and spring breaks

Using the HEMS standard in your trust ensures that a portion of your funds will go directly to education. The standard offers a measure of protection for younger children, who may not have the capacity to make financial decisions themselves.

In many instances, if the trustee and beneficiary aren’t the same people, they work in opposing roles. The beneficiary usually wants to withdraw their trust funds, while the trustee aims to keep the trust intact. Having a HEMS standard, in this case, controls the distributions from the trust to limit unwanted diminishment.

A HEMS standard is also useful in providing long-term support for beneficiaries who struggle with special needs that would inhibit them from distributing their trust rationally. When the trust contains HEMS wording, the beneficiary will still receive support from the trust, but only for medical care, basic needs, and education.

How does the HEMS Standard Affect the Trustee?

The HEMS provision gives the trustee more control over the distribution of trust funds. The trustee has the discretionary power to distribute the funds into the four main categories as they see fit. However, the HEMS wording will still control how much discretion the trustee can exercise to prevent overzealous trustees from preventing the beneficiary from accessing their fund.

Having a trust is supposed to give you peace of mind that your beneficiaries will receive support after your death. HEMS language can be as specific or broad as necessary to protect everyone involved. Using the correct standards and terminology ensures that you can tailor your trust to your circumstances while ensuring that your legacy lives on and your loved ones receive the support you want for them.

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How Does Funding a Trust Work?

Funding a trust transfers ownership of some of your assets to the trust. You get to nominate a trustee who will have control over these assets and ensure their correct distribution. Keep in mind that you may designate yourself as the trustee if you wish.

You can fund a trust with any type of property, including:

  • Titled property such as cars, motorcycles, etc.
  • Untitled property such as jewelry, collectibles, artworks, etc.
  • Bank accounts
  • Securities such as stocks and bonds
  • Real estate
  • Business interests such as shares in a partnership
  • Policies such as life insurance, retirement accounts, and medical savings accounts

Estate Planning Attorney | HEMS Standard | The TGQ Law Firm

Estate planning can feel extremely complicated, especially if you’re in a complex situation. It’s vital to work with a reputable estate planning attorney in Ann Arbor, MI.

The TGQ Law Firm is a Michigan-based law firm that specializes in estate planning. We’ve helped hundreds of people secure their legacy for their loved ones, and we can do the same for you. If you have further questions about the HEMS standard or trusts in general, contact us today.

You can schedule an estate planning assessment by calling us at (734) 707-3232 or by clicking here. We look forward to hearing from you and helping you plan for the unthinkable today.

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Disclaimer: This article is not intended to be legal advice.  Everyone’s situation is different and legal advice is only properly given after having reviewed your specific situation.