Protecting a Utah Family Home from Medicaid Estate Recovery
This guide explains how Utah families can protect a residence using a Medicaid Asset Protection Trust (MAPT) or a Life Estate Deed with retained occupancy, with citations to Utah statutes and Medicaid rules.
What is Medicaid Estate Recovery in Utah? Key Context
After a Medicaid recipient passes away, Utah may seek reimbursement for correctly paid Medicaid benefits from the recipient’s estate and from any trust in which the recipient is a grantor and a beneficiary, generally for services provided at age 55 or older. Exceptions apply for a surviving spouse, a child under 21, or a child who is blind or disabled. Utah’s Office of Recovery Services (ORS) administers this process and may also use TEFRA liens in limited circumstances during life.
Authority: Utah Code § 26B-3-1013; Utah Medicaid: Estate Recovery; Office of Recovery Services (ORS): Estate Recovery.
Option 1: Medicaid Asset Protection Trust (MAPT)
What it is
A MAPT is an irrevocable trust you fund (often with your home) to remove the asset from your countable estate for Medicaid purposes after the look-back period. With proper drafting, you keep a lifetime right to live in the home rent-free, while children or other beneficiaries receive the remainder at death—outside probate and outside estate recovery.
Key Utah drafting points
- Irrevocability & no retained control: You cannot retain powers to revoke or access principal. Instead, reserve a clear right of occupancy to continue living in the home. Include robust spendthrift terms. See the organization of Utah trust/spendthrift rules in Title 75B.
- Independent trustee: Use a non-settlor, non-spouse trustee to administer the trust and, if needed, sell the residence and purchase a replacement home inside the trust.
- Beneficiaries: Typically descendants (not the settlor) for principal/remainder to avoid a “grantor-beneficiary” recovery scenario.
Why it protects against estate recovery
Utah recovers from probate estates and from trusts where the recipient is both grantor and beneficiary. Proper MAPTs keep the recipient off the beneficiary list for principal (and often income), while reserving only an occupancy right—so there is no “grantor-beneficiary” status for recovery. After seasoning (5 years), the home is generally outside eligibility and recovery reach.
Rent question (important!)
No rent is required when the trust expressly reserves a lifetime right of occupancy for the settlor. Utilities/taxes/insurance can be allocated by the trust terms.
Option 2: Life Estate Deed with Retained Occupancy
What it is
With a life-estate deed, you deed the property to a child (the “remainderman”) and retain a life estate—a guaranteed right to live in the home for life. At death, title passes automatically to the child without probate. This structure is simpler than a trust, but it provides partial protection only (Utah can still recover against the life-estate value after death if benefits were paid).
Caregiver-child exemption note
There is a narrow, fact-intensive federal exemption that may allow a penalty-free transfer of the home to a child who lived in the home and provided care that delayed nursing-home placement for at least two years immediately prior to institutionalization. Evidence requirements are strict.
MAPT vs. Life Estate: Side-by-Side
| Feature | MAPT (Irrevocable Trust) | Life Estate Deed |
|---|---|---|
| Who owns the home? | The trust (trustee holds title) | Remainderman owns remainder; you retain life estate |
| Right to live there | Explicit lifetime occupancy clause (rent-free) | Life estate provides statutory occupancy (rent-free) |
| Medicaid eligibility after 5 years | Generally not countable after seasoning | Generally not countable after seasoning |
| Estate recovery exposure | None if properly drafted (not a grantor-beneficiary trust) | Yes (partial)—life-estate value after death |
| Probate | Bypasses probate | Bypasses probate |
| Flexibility to sell/move | Trustee can sell and buy a replacement home in trust | Sale generally requires both life tenant and remainderman signatures |
| Setup & complexity | Attorney-drafted trust; more complex | Deed-based; simpler |
The 5-Year Look-Back (Transfers & Trusts)
Federal Medicaid imposes a five-year look-back on transfers for less than fair market value. Transfers to an irrevocable trust (including a MAPT) or gifts via deed within that window can trigger a penalty period of ineligibility. Plan early to allow seasoning before you apply for long-term-care Medicaid.
Authority: 42 U.S.C. § 1396p (liens, recovery & transfers); Utah Admin. Code R414-305-7 (Treatment of Trusts).
Utah-Friendly Tax & Practical Notes
- Step-up in basis: Properly designed MAPTs often preserve grantor-trust income tax treatment, enabling a basis step-up at death similar to life-estate deeds (reducing capital gains for heirs on sale). Confirm with counsel/CPA.
- Primary residence exemption: Counties generally allow homestead/primary-residence treatment where occupancy continues; confirm requirements with the county and trustee.
- Administration: MAPTs require a diligent trustee; life-estate deeds are simpler but less flexible if you need to refinance or sell.
Frequently Asked Questions
- Do I have to pay rent if my home is in a MAPT?
- No. When your trust reserves a lifetime occupancy right, you may remain in the home rent-free while the trustee holds title.
- Is my home exempt from estate recovery if it was exempt for eligibility?
- No. An eligibility exemption does not prevent estate recovery against the home after death; that requires planning ahead (e.g., MAPT) and timing.
- Can Utah recover from a trust?
- Yes—if it’s a trust in which the recipient is both a grantor and a beneficiary. Proper MAPTs avoid that status.
- Are there penalty-free transfers to children?
- Possibly under the narrow “caregiver-child” exception if stringent criteria are met (lived in the home and provided care delaying placement for 2+ years). Proof is strict and case-specific.
Next Steps
Every family is different. If you’re in Utah and want to protect a residence, we’ll evaluate timing, the care horizon, family dynamics, and tax issues—then recommend a MAPT or a life-estate deed (or a hybrid approach).
Secure a confidential consultation with our Utah estate planning team.
Utah’s estate recovery is administered by the Office of Recovery Services. Review the state’s guidance and your eligibility timeline before any transfers or trust funding: Utah Medicaid: Estate Recovery • ORS Medicaid Recovery.
Legal Sources & Citations
- Utah Medicaid — Estate Recovery (program overview; recovery scope/exceptions).
- Office of Recovery Services — Estate Recovery (administration & protections).
- Utah Code § 26B-3-1013 (Estate & trust recovery authority).
- Utah Admin. Code R414-305-7 (Treatment of trusts for eligibility).
- 42 U.S.C. § 1396p (Liens, adjustments & recoveries, transfers of assets).
- Utah Code § 75-3-105 (notice to ORS in probate) (procedural tie-in for claims).