76R12448 PAM-F By Hartnett H.B. No. 3001 Substitute the following for H.B. No. 3001: By Brimer C.S.H.B. No. 3001 A BILL TO BE ENTITLED 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) "Community trust" means a community trust as 1-10 described by 26 C.F.R. Section 1.170A-9(e)(11) (1999), including 1-11 subsequent amendments. 1-12 (2) "Assets" means the assets of the component trust 1-13 funds of a community trust. 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.