In your “HEMS” example, what would be considered maintenance and support? Would that be good/shelter or something else? Thanks.
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I recommend asking your estate attorney. The term is also referred to as “MESH,” and what constitutes reasonable expenses in the M and S components can vary from state to state because T&E law is state specific.
Some examples:
https://www.foxrothschild.com/publications/what-does-maintenance-and-support-really-mean-in-a-trust/
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@1Lotus, good question. @BunsenBurner, thanks for the link. I would have tried to say the same thing, perhaps not so clearly.
One other thing that is probably not relevant but I offer for consideration. In another trust that I had set up for the benefit of me, my wife and our progeny, the terms are such that it can buy a condo or even a country house as an investment. We can use it so long as we pay market rent for it (which incidentally puts money in the trust). When our daughter was going to college in Boston, she hated dorm living and dorm food and wanted to rent an apartment – very expensive and landlords did not want to rent to sophomores – or be a roommate in a house (again, hard to find someone who would add her as a sophomore). So, the trust bought a condo in a nice neighborhood in walking distance to school but, as she was studying to be a nurse/nurse practitioner, near some of the Harvard teaching hospitals. She then got two of her friends to be her roommates. We nearly broke even on the rental. We paid $425K for it, put a modest amount into it but never renovated, and sold it recently for a bit under $700K after renting it for a modest profit for a number of years. So the trust made a pretty good profit. In addition, whatever the wording, our trust would have been able to help our kid with purchasing a car if it was needed for employment. Not sure if that is HEMS or MESH or not, but it was allowed.
Oh. Get a really good lawyer to do this. From one of the other links in this post, "It’s important to consider hiring a professional estate lawyer to help you establish a trust, so that you can ensure that a trust covers all potential issues.
“For example, you don’t want to accidentally disinherit a child’s spouse,” said Niell. “I’ve seen many cases on both sides where the parents have had a very longstanding relationship with a spouse, and they inadvertently disinherit that person after a death even though they don’t mean to. If their daughter or son were to pass away, they actually wanted that spouse to inherit, but they didn’t put that caveat into the document.”
I hope this is helpful.
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This happened to a cousin of a close friend. The cousin got divorced just as their youngest child was starting high school. A few years later they remarried someone (whose kids had all recently finished college). The cousin owned a home and had other assets, but put off making a will. A couple years later the cousin died unexpectedly. Since there was no will the new spouse got everything, and their adult children will likely end up with the cousin’s home and money. The cousin’s children will get nothing. Well, let me amend: they each were given an inexpensive personal memento. It’s too bad, and it could have been prevented.
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This is up to state law. My friend has been married for 24 years. Her husband has 2 children from a previous marriage (one bio, one adopted). If he dies, not everything goes into his estate (life insurance, some investments, house if it is held in joint tenancy). If he dies without a will, the first $150k of his estate goes to his wife, and then the rest has a percentage going to the wife and a percentage going to his children not from this marriage. If the only children were from the marriage, spouse would take all, but if there are children from a prior marriage, the law protects them.
In this case, the husband is set to inherit a valuable property from his mother, who is 98 and still hanging in there! He has to split that with his sister (or her kids). That would be part of his estate if he can’t get it into a trust first. My friend has no kids to leave it to, and just one sister and one nephew and she’s not all that interested in leaving a lot to them.
My daughter says “Hey, she’s my godmother. Shouldn’t I get something?” She’s read too many Bronte novels.
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I had thought about a trust. I haven’t talked about it with the lawyer that set up my will and living trust, but after reading the book “Beyond the Grave” by Jeffrey Condon I figured it might not work the way I hope if I tried.
The first issue is who would be the trustee of the money for the remarried brother?
- the remarried brother – Condon’s book actually suggests setting up such a trust to give them an argument against the spouse who wants to spend the money since they can point to the trust terms, but in the end they could do so anyway.
- the other brother – I wouldn’t want to set up future conflict where one brother has to ask the other for permission and justify expenses
- a third party such as a bank – a possibility but they have a minimum size they will accept and the trust might fall below that, especially as it is used. Then there is the expense; if the trust lasts 20 years then 20% or more of the trust would have gone to the bank. Lastly, money is fungible. The article linked above for MESH lists legitimate ways to use the trust as including “living expenses such as mortgage payments, property taxes, insurance payments, utility payments, vacations, and the like.” The brother and spouse could simply decide to stop paying these on their own and use the trust instead, effectively converting the inheritance into community property.
In the end I’m resigned that there is no ideal solution. When leaving money to siblings one hopes they would want it to benefit both them and their children. And for the still-married-to-original-spouse brother our interests are aligned. It doesn’t seem far-fetched to think of the 2nd wife as having the same motivation, even if it isn’t my hope for the inheritance. By explicitly leaving money to my nephews at least they get a share, hopefully at an age (35) where they will use the money to enhance their lives rather than serving as a disruption.
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You could write a letter to your brothers explaining your wishes as well and hope they honor said wishes. My kids have been very responsible with large (5 digit) gifts we’ve given them. They are now 31 & 33 years old. I’d suspect many are able to be pretty responsible while sadly others (like nephew of similar age) aren’t.
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I have a family member who is trustee for a college friend who died way too young.
Perhaps consider a non-family member who is good with financial matters, well organized, and understands the goal? Reduces some of the friction among family members when it’s not “Uncle Joe” or “Aunt Sally” standing between a beneficiary and the Ferrari of their dreams!
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I concur with @blossom. The trustee for our dynasty trust and for the dynasty trust I am setting up for my son is a close friend of ShawWife’s who is a former lawyer, wealthy (she and her husband are quite wealthy due to some of his work activities and she decided she would rather do social philanthropy than lawyer), she loves our kids, and is very, very capable though typically stretched way too thin. We trust that she would do a sensible thing in any event.
My older sister is the trustee for my brother. My brother and mother thought she was the best. They actually decided that, because I thought she should put the money in trust, that I didn’t like him. Not true, just realistic. But, I am glad not to have to be pulled emotionally by requests from my brother.
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We have something of the opposite problem. One son is married to an only child of a single elderly parent, and my son is almost certainly going to predecease that wife, and very likely to predecease us, leaving her alone. (her own mother is unlikely to leave anything to anyone) We’re trying to figure out a way to include her in our own estate plans, somehow, but it’s really complicated.
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I’m really sorry about that predicament @greenbutton. Heartbreaking decision.
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So sorry to read of the sad situation. One idea could be to assign your son and DIL as 50/50 beneficiary on some assets.
That is not a bad idea; right now the plan is to designate her as the beneficiary of one of the CDs or other investment accounts. Even if she were to remarry, I would want her to have something from us, since we are all she has and I feel like we owe her that at a minimum. But hopefully it won’t come to that 
He’s beaten all the predictions and odds for many years, and his doctors are always pointing out that they really can’t have solid predictions for everyone . I appreciate the empathy, though.
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