1-1 AN ACT
1-2 relating to authorizing certain trusts to convert to nonprofit
1-3 corporations.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Subchapter C, Chapter 112, Property Code, is
1-6 amended by adding Section 112.058 to read as follows:
1-7 Sec. 112.058. CONVERSION OF COMMUNITY TRUST TO NONPROFIT
1-8 CORPORATION. (a) In this section:
1-9 (1) "Assets" means the assets of the component trust
1-10 funds of a community trust.
1-11 (2) "Community trust" means a community trust as
1-12 described by 26 C.F.R. Section 1.170A-9(e)(11) (1999), including
1-13 subsequent amendments.
1-14 (b) A community trust with court approval may transfer the
1-15 assets of the trust to a nonprofit corporation and terminate the
1-16 trust as provided by this section.
1-17 (c) The community trust may transfer assets of the trust to
1-18 a nonprofit corporation only if the nonprofit corporation is
1-19 organized under the Texas Non-Profit Corporation Act (Article
1-20 1396-1.01 et seq., Vernon's Texas Civil Statutes) and organized for
1-21 the same purpose as the community trust. The charter of the
1-22 nonprofit corporation must describe the purpose of the corporation
1-23 and the proposed use of the assets transferred using language
1-24 substantially similar to the language used in the instrument
2-1 creating the community trust.
2-2 (d) To transfer the assets of and terminate a community
2-3 trust under this section, the governing body of the community trust
2-4 must:
2-5 (1) file a petition in a probate court, county court,
2-6 or district court requesting:
2-7 (A) the transfer of the assets of the trust to a
2-8 nonprofit corporation established for the purpose of receiving and
2-9 administering the assets of the trust; and
2-10 (B) the termination of the trust;
2-11 (2) send by first class mail to each trust settlor and
2-12 each trustee of each component trust of the community trust who can
2-13 be located by the exercise of reasonable diligence a copy of the
2-14 governing body's petition and a notice specifying the time and
2-15 place of the court-scheduled hearing on the petition; and
2-16 (3) publish once in a newspaper of general circulation
2-17 in the county in which the proceeding is pending a notice that
2-18 reads substantially similar to the following:
2-19 TO ALL INTERESTED PERSONS:
2-20 (NAME OF COMMUNITY TRUST) HAS FILED A PETITION IN (NAME OF
2-21 COURT) OF (NAME OF COUNTY), TEXAS, REQUESTING PERMISSION TO CONVERT
2-22 TO A NONPROFIT CORPORATION. IF PERMITTED TO CONVERT:
2-23 (1) THE (NAME OF COMMUNITY TRUST) WILL BE TERMINATED;
2-24 AND
2-25 (2) THE ASSETS OF THE TRUST WILL BE:
2-26 (A) TRANSFERRED TO A NONPROFIT CORPORATION WITH
2-27 THE SAME NAME AND CREATED FOR THE SAME PURPOSE AS THE (NAME OF
3-1 COMMUNITY TRUST); AND
3-2 (B) HELD AND ADMINISTERED BY THE CORPORATION AS
3-3 PROVIDED BY THE TEXAS NON-PROFIT CORPORATION ACT (ARTICLE 1396-1.01
3-4 ET SEQ., VERNON'S TEXAS CIVIL STATUTES).
3-5 THE PURPOSE OF THE CONVERSION IS TO ACHIEVE SAVINGS AND USE
3-6 THE MONEY SAVED TO FURTHER THE PURPOSES FOR WHICH THE (NAME OF
3-7 COMMUNITY TRUST) WAS CREATED.
3-8 A HEARING ON THE PETITION IS SCHEDULED ON (DATE AND TIME) AT
3-9 (LOCATION OF COURT).
3-10 FOR ADDITIONAL INFORMATION, YOU MAY CONTACT THE GOVERNING
3-11 BODY OF THE (NAME OF COMMUNITY TRUST) AT (ADDRESS AND TELEPHONE
3-12 NUMBER) OR THE COURT.
3-13 (e) The court shall schedule a hearing on the petition to be
3-14 held after the 10th day after the date the notices required by
3-15 Subsection (d)(2) are deposited in the mail or the date the notice
3-16 required by Subsection (d)(3) is published, whichever is later.
3-17 The hearing must be held at the time and place stated in the
3-18 notices unless the court, for good cause, postpones the hearing.
3-19 If the hearing is postponed, a notice of the rescheduled hearing
3-20 date and time must be posted at the courthouse of the county in
3-21 which the proceeding is pending or at the place in or near the
3-22 courthouse where public notices are customarily posted.
3-23 (f) The court, on a request from the governing body of the
3-24 community trust, may by order require approval from the Internal
3-25 Revenue Service for an asset transfer under this section. If the
3-26 court orders approval from the Internal Revenue Service, the asset
3-27 transfer may occur on the date the governing body of the community
4-1 trust files a notice with the court indicating that the Internal
4-2 Revenue Service has approved the asset transfer. The notice
4-3 required by this subsection must be filed on or before the first
4-4 anniversary of the date the court's order approving the asset
4-5 transfer is signed. If the notice is not filed within the period
4-6 prescribed by this subsection, the court's order is dissolved.
4-7 (g) A court order transferring the assets of and terminating
4-8 a community trust must provide that the duties of each trustee of
4-9 each component trust fund of the community trust are terminated on
4-10 the date the assets are transferred. This subsection does not
4-11 affect the liability of a trustee for acts or omissions that
4-12 occurred before the duties of the trustee are terminated.
4-13 SECTION 2. This Act takes effect September 1, 1999.
4-14 SECTION 3. The importance of this legislation and the
4-15 crowded condition of the calendars in both houses create an
4-16 emergency and an imperative public necessity that the
4-17 constitutional rule requiring bills to be read on three several
4-18 days in each house be suspended, and this rule is hereby suspended.
_______________________________ _______________________________
President of the Senate Speaker of the House
I certify that H.B. No. 3001 was passed by the House on May
8, 1999, by a non-record vote.
_______________________________
Chief Clerk of the House
I certify that H.B. No. 3001 was passed by the Senate on May
26, 1999, by the following vote: Yeas 30, Nays 0.
_______________________________
Secretary of the Senate
APPROVED: _____________________
Date
_____________________
Governor