A trustee for a family trust in Manhattan gets a call. The founder’s son, the beneficiary, wants to take a six-figure distribution to buy a weekend house in the Hamptons. He argues it falls under “maintenance and support,” a phrase used in the trust document. The trustee is now in a difficult position: Is this a prudent use of the funds his late client set aside? Or is it a breach of his fiduciary duty?
This is not a hypothetical—I have seen this scenario play out many times. The conflict often centers on four words that form an acronym: HEMS. This standard for Health, Education, Maintenance, and Support is one of the most common and most misunderstood provisions in New York trust law. It is intended to provide a flexible yet enforceable guideline for how a trustee can distribute assets. But flexibility can breed conflict when expectations are not aligned.
What “HEMS” Actually Means
HEMS is what the law calls an “ascertainable standard.” It is a set of criteria that gives a trustee direction without being overly rigid. It prevents the trustee from having absolute, unchecked power, but it also avoids the need for a trust document to list every single permissible expense. The goal is to give the trustee enough discretion to act in the beneficiary’s best interests while staying true to the grantor’s original intent.
The four components are:
- Health: This is the most straightforward. It covers medical, dental, psychiatric, and hospital expenses. It can also extend to nursing home care and medically necessary home modifications.
- Education: This generally includes tuition for college, graduate school, and vocational programs. It can also encompass related costs like room, board, books, and a reasonable study-abroad program.
- Maintenance and Support: This is where ambiguity—and disputes—often arise. These terms are not defined by a dollar amount but by the beneficiary’s accustomed standard of living when the trust was created. “Maintenance” includes essentials like mortgage or rent, property taxes, insurance, and utilities. “Support” can be broader, covering clothing, transportation, and even vacations, if that was part of the family’s established lifestyle.
So, what about the weekend house in the Hamptons? A trustee would have to ask several questions. Was owning multiple homes part of the family’s lifestyle before the trust was funded? Does the trust have sufficient assets to make the distribution without impairing its ability to provide for the beneficiary’s future health and education needs? The answer is not always clear, which is why the role of the trustee is so critical.
The Trustee’s Duty and the IRS’s Interest
A trustee is a fiduciary. This is the highest standard of care recognized in our legal system, governed in New York by statutes like the Prudent Investor Act under EPTL § 11-2.3. A trustee’s duty is to the trust itself—to the instructions left by the person who created it and to the well-being of its beneficiaries. The HEMS standard is a tool to help the trustee fulfill that duty. It provides a defensible framework for making decisions, protecting the trustee from accusations of being either too generous or too restrictive.
But the HEMS standard does more than guide a trustee’s judgment. It has significant tax implications. The Internal Revenue Service recognizes HEMS as a sufficiently restrictive standard. Under Internal Revenue Code Section 2041, if a beneficiary is also serving as their own trustee, having a HEMS standard in place can prevent the entire value of the trust from being included in their taxable estate upon their death.
Without this ascertainable standard, the IRS could argue that the beneficiary-trustee had a “general power of appointment” over the assets—meaning they could effectively use the money for anything they wanted. That control would cause the assets to be treated as their own for estate tax purposes. By including HEMS language, we create a boundary that is respected by the tax code, preserving the trust’s assets for the next generation.
Defining Your Intent Beyond the Acronym
While HEMS is a powerful default, it is not a one-size-fits-all instruction. The real work of stewardship is defining what “support” means for your family. When I work with clients, we have frank conversations about their vision for the wealth they are passing on. The trust document is their voice, speaking for them long after they are gone. We need to make sure that voice is clear.
We can add language to the trust to clarify intent. For example, we can specify that trust funds may be used for:
- A down payment on a primary residence.
- Reasonable seed capital for a new business venture.
- The costs associated with a wedding.
We can also explicitly restrict certain uses. The goal is not to control from the grave, but to provide clarity that protects both the beneficiary and the trustee. A well-drafted trust anticipates points of friction and smooths them over with deliberate language. It transforms a generic legal standard into a personal statement of legacy.
Stewardship.
That is the core of this work. The HEMS standard is a starting point, a legal foundation upon which we build a plan that reflects a family’s unique values and goals. It balances the need for structure with the reality of an unpredictable future.
If you currently serve as a trustee or have a trust with HEMS provisions, it is prudent to understand precisely what those terms mean in your specific circumstances. Our firm offers a trust document review to analyze the existing language and identify any ambiguities before they can become a source of conflict.
