Utah Special Needs Trust Rules (2026) | Complete State Guide

1. 1. Utah taxes trust income at 4.50% — but there’s no estate or inheritance tax.
   If you set up a third-party trust, the trust itself pays a flat 4.50% state income tax on earnings, plus federal tax. That’s a moderate rate — lower than California or New York, higher than states with no income tax. The good news: Utah has no estate tax and no inheritance tax, so assets passing into the trust at your death face no state-level tax hit.
2. 2. Utah’s Medicaid estate recovery goes way beyond probate — but the rules depend on which type of trust you have.
   (For third-party SNTs) This is the big one. Utah uses an expanded definition of “estate” that reaches joint bank accounts, living trusts, life estates, and real property — even your home, even if it was excluded when your child qualified for Medicaid. They can even place TEFRA liens on property during your child’s lifetime if they’ve been in a nursing facility for 180+ days. A properly drafted third-party special needs trust stays completely outside this reach. When you pass away, whatever is left in the trust goes to the people you named — Utah Medicaid has no claim.
   (For first-party SNTs) Different rule. Because this trust was funded with your family member’s own money, federal law (42 USC §1396p) requires that any funds left in the trust when they pass away must first reimburse Utah Medicaid for benefits paid during their lifetime. This isn’t estate recovery — it’s a payback clause built into the trust itself. Whatever remains after Medicaid is repaid goes to the family. This is the tradeoff for protecting benefits during your family member’s life.
3. 3. You probably don’t need a separate income trust (Miller Trust). (For first-party SNTs)
   Some states have a hard income cutoff for Medicaid — go over by $1 and you’re out unless you set up a Qualified Income Trust. Utah has a Medically Needy pathway (also called spenddown), so families can qualify by spending excess income on medical bills instead of setting up a separate trust. That said, if nursing home care is involved and income exceeds $2,982/month, talk to your attorney about the best approach.
4. 4. Getting SSI does NOT automatically get your child Medicaid in Utah.
   In many states, an SSI approval automatically enrolls you in Medicaid. Not in Utah. Utah is an SSI Criteria state, which means your child has to file a separate Medicaid application with the state even after SSI approval. Don’t assume they’re covered — file the application.
5. 5. Utah just overhauled its entire trust code — and added a powerful new tool.
   In September 2024, Utah recodified all trust law under Title 75B (the old Title 75, Chapter 7 was repealed). Then in 2025, the legislature passed SB 206, a dedicated trust decanting statute. This lets a trustee take an existing trust — say, a standard trust a grandparent set up years ago — and restructure it into a special needs trust without going to court. If your family has an older trust that wasn’t designed for disability planning, this could be a game-changer.
6. 6. Transfer-on-death deeds exist in Utah — but don’t rely on them alone.
   Utah adopted transfer-on-death (TOD) deeds in 2018, which let property bypass probate. That sounds great, but remember: Utah’s expanded estate recovery can reach beyond probate. A TOD deed may not protect the property from Medicaid recovery. Your attorney should evaluate whether the home belongs in a trust, uses a TOD deed, or needs a different strategy.
7. 7. The trust can pay for groceries without reducing your child’s SSI.
   This changed in October 2024. Before that, buying food with trust money was counted as income, which cut the SSI check. It doesn’t anymore. Your trustee should know about this change.
8. 8. The trust paying for housing DOES still reduce SSI.
   Rent, mortgage, utilities — if the trust pays those, the SSI check goes down (up to about $351/month in 2026). That’s the tradeoff, and it’s worth understanding before your trustee starts writing checks.
9. 9. The DSPD waiver waitlist is 5,345 people deep — apply now.
   Utah’s Division of Services for People with Disabilities (DSPD) runs five Medicaid waivers for people with disabilities, but the average wait for services is 5.4 years. That’s over 5,000 families waiting. Get on the list the day your child is eligible, even if you don’t need services yet. The Limited Supports Waiver ($21,250/year cap) may provide some help while you wait for a full waiver slot.
10. 10. Utah’s guardianship laws are changing fast — know your options.
    In 2025 alone, Utah passed a Guardianship Bill of Rights (preserving rights not specifically restricted by a judge), a Supported Decision-Making law (HB 334, letting adults with disabilities designate trusted supporters without losing legal rights), and a controversial law (SB 199) creating a more restrictive guardianship category that the ACLU and Disability Law Center are challenging in federal court. When your child approaches 18, talk to an attorney about the full range of options before defaulting to full guardianship.
11. 11. The person managing the trust (the “trustee”) has to account for every dollar — no matter what type of trust you set up.
    Whether you created a third-party trust (funded with your money) or your child has a first-party trust (funded with theirs), Utah law (Utah Code § 75-7-811) gives your family the right to request a full accounting of how trust money is being spent. This isn’t optional — it’s the law. If a bank, attorney, or family member is serving as trustee and won’t show you where the money is going, that’s a red flag.

From my 15+ years helping families (including my own):

1. Leaving money directly to your disabled child. A well-meaning grandparent leaves $50,000 in a will to your child — and destroys their SSI and Medicaid. Every dollar meant for your child needs to go through the trust, not to them.
2. Creating the trust but never funding it. A trust sitting in a drawer with no assets in it protects nothing. The trust only works if you actually move assets into it — bank accounts, life insurance beneficiary designations, your will.
3. Not understanding how far Utah’s estate recovery reaches. Many families assume that if assets skip probate, they’re safe. In Utah, that’s wrong. Medicaid recovery reaches joint accounts, living trusts, life estates, and real property — even if the home was excluded during eligibility. A third-party SNT is one of the few reliable protections.
4. Assuming SSI automatically means Medicaid in Utah. It doesn’t. Utah requires a separate Medicaid application even after SSI approval. Families who don’t file can go months without Medicaid coverage — and that gap can mean missed therapies, prescriptions, and waiver services.
5. Using a transfer-on-death deed and thinking the home is protected. TOD deeds bypass probate, but Utah’s expanded estate recovery definition may still reach the property. Don’t rely on a TOD deed alone to protect real estate from Medicaid — talk to your attorney about whether a trust is the better option.
6. Not getting on the DSPD waitlist immediately. With a 5.4-year average wait and over 5,345 people on the list, every month you delay is a month added to the wait. Apply the day your child is eligible, even if you don’t need waiver services yet.
7. Not realizing that both first-party trusts AND ABLE accounts have Medicaid payback in Utah. If the trust was funded with your child’s own money, Utah Medicaid gets reimbursed from whatever’s left at death. And unlike some states, Utah also requires Medicaid payback from ABLE account balances. Moving money between the two doesn’t avoid the payback — it follows. This makes third-party planning even more important.

The best way to avoid these mistakes? Work with an attorney who knows Utah special needs law — and there are very few specialists in the state. Find Utah attorneys →

Important: Utah ABLE accounts DO require Medicaid payback at death.

Unlike some states that have waived this requirement, Utah Medicaid is a creditor on ABLE accounts after the owner’s death. Qualified disability expenses and funeral costs are paid first, then Medicaid is reimbursed for medical assistance paid after the account was opened. Remaining funds go to your designated beneficiary.

Beyond the Trust: Other Utah Planning Steps

Guardianship & Conservatorship: When your child turns 18, you may need legal authority to help with decisions. Utah uses both guardianship (personal decisions) and conservatorship (financial decisions), with a strong preference for limited guardianship. A new Guardianship Bill of Rights (2025) preserves all rights not specifically restricted, and the state’s new Supported Decision-Making law (HB 334) lets adults designate trusted supporters without giving up any legal rights. Compare your options →
Medicaid Waivers: Utah’s DSPD manages five waivers with over 5,345 people waiting — an average of 5.4 years. The Limited Supports Waiver ($21,250/year) may provide some help while you wait. Learn about waivers →