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.