Special Needs Trust - Utah

SPECIAL NEEDS TRUST AGREEMENT

(Utah – Irrevocable, Discretionary Supplemental Needs Trust)

TABLE OF CONTENTS

1. Document Header
2. Definitions
3. Establishment of Trust & Irrevocability
4. Purpose & Distribution Standards
5. Beneficiary Rights & Spendthrift Protection
6. Trustee Powers & Duties
7. Administration; Accountings; Tax Matters
8. Risk Allocation
9. Dispute Resolution
10. General Provisions
11. Execution Block

1. DOCUMENT HEADER

1.1 Title & Parties
This SPECIAL NEEDS TRUST AGREEMENT (“Trust Agreement”) is made effective as of [EFFECTIVE DATE] (the “Effective Date”) by and among:
a. [NAME OF SETTLOR], an individual with an address at [ADDRESS] (“Settlor”);
b. [NAME OF TRUSTEE], with an address at [ADDRESS] (“Trustee”); and
c. [NAME OF BENEFICIARY], born [DOB], residing at [ADDRESS] (“Primary Beneficiary”).

1.2 Recitals
A. Settlor desires to establish an irrevocable trust to provide for the supplemental and extra needs of the Primary Beneficiary, who is a person with a disability as defined in 42 U.S.C. § 1382c(a)(3).
B. The intent of Settlor is to preserve the Beneficiary’s continuing eligibility for means-tested governmental assistance programs, including Supplemental Security Income (“SSI”) and Medicaid, while permitting Trustee to expend trust property to enhance the Beneficiary’s quality of life.
C. Trustee is willing to accept the trust and administer it in accordance with this Trust Agreement and applicable law.

Funding classification: This Trust is funded with [ONLY PROPERTY OF PERSONS OTHER THAN BENEFICIARY / PROPERTY OWNED BY BENEFICIARY]. If funded with Beneficiary-owned property, Beneficiary is under age 65 when this Trust is established and the person establishing it is [BENEFICIARY / PARENT / GRANDPARENT / LEGAL GUARDIAN / COURT]. Trustee shall record the source of each contribution.

NOW, THEREFORE, Settlor irrevocably delivers to Trustee the property listed on Schedule A (the “Trust Estate”) to be held, managed, and distributed as set forth below.

2. DEFINITIONS

For purposes of this Trust Agreement, capitalized terms have the meanings set forth below:

“Accounting Period” – Each calendar year ending December 31, or such other period selected by Trustee in writing.
“Beneficiary” – Collectively, the Primary Beneficiary and any [CONTINGENT / REMAINDER] beneficiaries described in Section 4.5.
“Government Benefits” – SSI, Medicaid, SNAP, subsidized housing, and any other federal, state, or local mean-tested program existing now or in the future.
“Supplemental Expense” – An expense Trustee determines will serve Beneficiary’s needs under Section 4, after reviewing its treatment under each benefit program that applies.
“Trust Assets” – All property, tangible or intangible, held in the Trust Estate from time to time.

3. ESTABLISHMENT OF TRUST & IRREVOCABILITY

3.1 Name. This trust shall be known as the “[BENEFICIARY] Supplemental Needs Trust” (the “Trust”).
3.2 Irrevocability. This Trust is irrevocable upon execution. Neither Settlor nor Beneficiary may alter, amend, revoke, or terminate the Trust except as expressly provided herein or by court order pursuant to Utah Code Ann. § 75B-2-412 (modification or termination because of circumstances not anticipated by Settlor, or inability to administer the Trust effectively).
3.3 Additional Contributions. Trustee shall document each contributor and the ownership of contributed property before accepting it. Do not add Beneficiary-owned property to a Trust classified as third-party-only in Section 1.2; review the Trust's classification and benefit treatment before accepting any such contribution.
3.4 SSI Resource Treatment. This Agreement does not determine whether Trust Assets are counted as Beneficiary’s SSI resources. Trustee shall administer the Trust without giving Beneficiary a right to direct the use of Trust principal and shall review the applicable SSI resource rules before making a transfer or distribution.

4. PURPOSE & DISTRIBUTION STANDARDS

4.1 Primary Purpose. The Trust’s primary purpose is to provide for Beneficiary’s supplemental needs over and above Government Benefits. If funded with Beneficiary-owned property under Section 1.2, Trustee shall administer it for Beneficiary’s sole benefit during Beneficiary’s lifetime, as required for the first-party trust exception under 42 U.S.C. § 1396p(d)(4)(A).
4.2 Standard of Distribution. Distributions are wholly within Trustee’s sole and absolute discretion. Beneficiary has no enforceable right to compel distributions. Trustee shall consider the availability of Government Benefits before making any distribution.
4.3 Prohibited Distributions. Trustee shall not:
a. Make any payment directly to Beneficiary that would be counted as income under SSI rules;
b. Expend Trust Assets for shelter-related costs (rent, mortgage, real property taxes, or utilities) without first considering the resulting in-kind support and maintenance ("ISM") reduction under the Social Security Administration's Value of the One-Third Reduction and Presumed Maximum Value rules, unless Trustee determines any resultant reduction in SSI is in Beneficiary's best interests. (Food is not counted as ISM: under the SSA final rule "Omitting Food From In-Kind Support and Maintenance Calculations," 89 Fed. Reg. 21209 (Mar. 27, 2024), effective September 30, 2024, food purchased or provided by Trustee no longer reduces Beneficiary's SSI payment and is not a restricted distribution under this subsection.);
c. Reimburse Settlor or any other person for support legally owed to Beneficiary.
4.4 Permitted Distributions. Trustee may pay vendors directly for Supplemental Expenses, including therapy, personal care attendants, recreation, education, transportation, internet, adaptive equipment, and legal or financial services, after considering the applicable benefit rules.
4.5 Remainder Interest. Upon Beneficiary’s death or earlier termination of the Trust:
a. Medicaid Payback (first-party trust only) – If this Trust contains Beneficiary-owned property and is administered under 42 U.S.C. § 1396p(d)(4)(A), then, upon Beneficiary’s death, Trustee shall pay from all remaining Trust Assets to every State that provided Medicaid assistance to Beneficiary under a State plan, up to the total medical assistance paid on Beneficiary’s behalf, without limiting repayment to Utah or to assistance paid after the Trust was established. Those States have priority over remainder beneficiaries and other debts and expenses, subject only to expenses federal rules allow ahead of Medicaid reimbursement. If Trust Assets are insufficient, Trustee may reimburse the States proportionally. If the Trust has only third-party property, this first-party payback clause does not apply.
b. [Remainder Beneficiaries] – Any balance shall be distributed to [NAME(S) & PERCENTAGES].
4.6 Trust Termination. The Trust terminates upon the earliest of: (i) exhaustion of Trust Assets; (ii) Beneficiary’s death and final distributions under Section 4.5; or (iii) court-approved termination consistent with applicable law. If the Trust contains Beneficiary-owned property, any early termination and payment of its remaining assets must comply with the first-party sole-benefit and Medicaid-payback requirements.

5. BENEFICIARY RIGHTS & SPENDTHRIFT PROTECTION

5.1 No Assignment. Beneficiary may not assign, pledge, anticipate, or encumber any interest in the Trust.
5.2 Spendthrift Clause. To the maximum extent permitted by Utah Code Ann. § 75B-2-502, Trust interests are protected from creditors and from legal process.
5.3 No Support Obligation. This Trust is intended to be supplemental; it shall not be construed as a resource available for Beneficiary’s support obligations otherwise borne by any governmental entity.

6. TRUSTEE POWERS & DUTIES

6.1 Standard of Care. Trustee shall administer the Trust as a prudent person would, consistent with Utah Code Ann. § 75B-2-804 (prudent administration), considering the special purposes of this Trust.
6.2 Enumerated Powers. Subject to Sections 4 and 7, Trustee may:
a. Invest and reinvest Trust Assets;
b. Employ professionals and delegate investment and management functions as permitted by Utah Code Ann. § 75B-2-814(2);
c. Make distributions in cash or in-kind;
d. Execute documents and perform acts to manage Trust property;
e. Seek instruction from the court when doubt exists.
6.3 Bond & Compensation. Trustee [shall / shall not] furnish bond. Trustee is entitled to reasonable compensation and reimbursement of expenses.
6.4 Successor Trustee. If the office of Trustee becomes vacant, [NAME FIRST SUCCESSOR] shall serve. Additional successors are listed in Schedule B. A successor Trustee shall assume office by written acceptance delivered to Settlor (if living) or Beneficiary.

7. ADMINISTRATION; ACCOUNTINGS; TAX MATTERS

7.1 Accountings. Within 60 days after each Accounting Period and upon change of Trustee, Trustee shall provide a written accounting to all qualified beneficiaries (or their legal representatives) and, if required, to the District Court. A qualified beneficiary may request the reports and information described in Utah Code § 75B-2-811.
7.2 Tax ID & Returns. Trustee shall determine the Trust's federal and state tax reporting status, obtain any required taxpayer identification number, and file any required returns. This Agreement does not assign income-tax liability to the Beneficiary; tax treatment depends on the Trust's funding, terms, and distributions.
7.3 Allocation of Receipts & Disbursements. Trustee shall follow Utah’s Uniform Fiduciary Income and Principal Act (Utah Code Ann. § 75A-5-101 et seq., Title 75A, Chapter 5, renumbered from Title 22, Chapter 3, effective September 1, 2024) unless inconsistent with the special needs purpose.

8. RISK ALLOCATION

8.1 Trustee Indemnification. Trustee and its agents are indemnified from the Trust Assets against any claim, loss, or liability arising from good-faith administration, except for willful misconduct or gross negligence.
8.2 Limitation of Liability. This Trust creates no blanket limit on Trustee liability. Any exculpation is subject to Utah Code § 75B-2-1008, including its bar on relieving liability for bad-faith or recklessly indifferent breach.
8.3 Insurance. Trustee may purchase fiduciary liability insurance and charge premiums to the Trust.
8.4 Force Majeure. Trustee is not liable for delay or failure to act caused by events beyond reasonable control, including natural disasters, governmental actions, epidemics, or market disruptions.

9. DISPUTE RESOLUTION

9.1 Governing Law. This Trust and all disputes hereunder are governed by the laws of the State of Utah, without regard to conflict-of-laws principles.
9.2 Exclusive Forum. The District Court has exclusive jurisdiction over trust matters, pursuant to Utah Code § 75B-2-201.
9.3 Limited Arbitration. Non-probate claims arising out of Trustee’s investment management may, at Trustee’s election, be submitted to confidential arbitration under the Utah Uniform Arbitration Act (§ 78B-11-101 et seq.). Probate matters remain in court.
9.4 Injunctive Relief. Nothing herein limits a party’s right to seek injunctive or declaratory relief from the District Court to enforce trust provisions.
9.5 Attorneys’ Fees. In any proceeding concerning the Trust, the court may award reasonable attorneys’ fees and costs as justice may require and may order such amounts paid from the Trust or personally by a party, consistent with § 75B-2-1004.

10. GENERAL PROVISIONS

10.1 Amendments & Reformation. Trustee may petition the District Court to modify or reform this Trust under § 75B-2-412 to further the special needs purpose and preserve Government Benefits.
10.2 No Merger. The legal and equitable titles shall not merge while any duties remain to be performed.
10.3 Assignment. Trustee may not assign its fiduciary position except as expressly provided herein or by court order.
10.4 Severability. If any provision is invalid, the remaining provisions remain effective, and the invalid provision shall be reformed to best accomplish the original intent.
10.5 Entire Agreement. This Trust Agreement, including all schedules, constitutes the entire understanding among the parties.
10.6 Counterparts & Electronic Signatures. This Agreement may be executed in counterparts, each deemed an original, and by electronic or facsimile signature to the fullest extent permitted by law.

11. EXECUTION BLOCK

IN WITNESS WHEREOF, the parties have executed this Special Needs Trust Agreement as of the Effective Date.

NOTARIZATION

State of Utah )
County of ______ ) ss.:

On this ___ day of __________, 20__, before me, the undersigned Notary Public, personally appeared [NAME OF SETTLOR] [and [NAME OF TRUSTEE]], proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to this instrument, and acknowledged that he/she/they executed the same for the purposes therein contained.

____________________________
Notary Public
My Commission Expires: __________

SCHEDULE A – INITIAL TRUST PROPERTY

[List cash amounts, securities, real property legal descriptions, etc.]

SCHEDULE B – SUCCESSOR TRUSTEES

1. [NAME FIRST SUCCESSOR]
2. [NAME SECOND SUCCESSOR]

IMPORTANT DISCLAIMER: This template provides general information and sample language. It is not legal advice and does not create an attorney-client relationship. Statutes and regulations change; practitioners must verify current law and tailor provisions to specific facts before use.