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Texas Property Code - Section 112.058. Conversion Of Community Trust To Nonprofit Corporation

Legal Research Home > Texas Laws > Property Code > Texas Property Code - Section 112.058. Conversion Of Community Trust To Nonprofit Corporation

§ 112.058. CONVERSION OF COMMUNITY TRUST TO NONPROFIT 
CORPORATION.  (a) In this section:
		(1)  "Assets" means the assets of the component trust 
funds of a community trust.
		(2)  "Community trust" means a community trust as 
described by 26 C.F.R. Section 1.170A-9(e)(11) (1999), including 
subsequent amendments.
	(b)  A community trust with court approval may transfer the 
assets of the trust to a nonprofit corporation and terminate the 
trust as provided by this section.
	(c)  The community trust may transfer assets of the trust to 
a nonprofit corporation only if the nonprofit corporation is 
organized under the Texas Non-Profit Corporation Act (Article 
1396-1.01 et seq., Vernon's Texas Civil Statutes) and organized for 
the same purpose as the community trust.  The charter of the 
nonprofit corporation must describe the purpose of the corporation 
and the proposed use of the assets transferred using language 
substantially similar to the language used in the instrument 
creating the community trust.
	(d)  To transfer the assets of and terminate a community 
trust under this section, the governing body of the community trust 
must:
		(1)  file a petition in a probate court, county court, 
or district court requesting:
			(A)  the transfer of the assets of the trust to a 
nonprofit corporation established for the purpose of receiving and 
administering the assets of the trust;  and
			(B)  the termination of the trust;                                           
		(2)  send by first class mail to each trust settlor and 
each trustee of each component trust of the community trust who can 
be located by the exercise of reasonable diligence a copy of the 
governing body's petition and a notice specifying the time and 
place of the court-scheduled hearing on the petition;  and
		(3)  publish once in a newspaper of general circulation 
in the county in which the proceeding is pending a notice that reads 
substantially similar to the following:

TO ALL INTERESTED PERSONS:
	(NAME OF COMMUNITY TRUST)  HAS FILED A PETITION IN (NAME OF 
COURT) OF (NAME OF COUNTY), TEXAS, REQUESTING PERMISSION TO CONVERT 
TO A NONPROFIT CORPORATION.  IF PERMITTED TO CONVERT:
		(1)  THE (NAME OF COMMUNITY TRUST) WILL BE TERMINATED;  
AND                 
		(2)  THE ASSETS OF THE TRUST WILL BE:                                         
			(A)  TRANSFERRED TO A NONPROFIT CORPORATION WITH 
THE SAME NAME AND CREATED FOR THE SAME PURPOSE AS THE (NAME OF 
COMMUNITY TRUST);  AND
			(B)  HELD AND ADMINISTERED BY THE CORPORATION AS 
PROVIDED BY THE TEXAS NON-PROFIT CORPORATION ACT (ARTICLE 1396-1.01 
ET SEQ., VERNON'S TEXAS CIVIL STATUTES).
		(1)  THE (NAME OF COMMUNITY TRUST) WILL BE TERMINATED;  
AND                 
		(2)  THE ASSETS OF THE TRUST WILL BE:                                         
			(A)  TRANSFERRED TO A NONPROFIT CORPORATION WITH 
THE SAME NAME AND CREATED FOR THE SAME PURPOSE AS THE (NAME OF 
COMMUNITY TRUST);  AND
			(B)  HELD AND ADMINISTERED BY THE CORPORATION AS 
PROVIDED BY THE TEXAS NON-PROFIT CORPORATION ACT (ARTICLE 1396-1.01 
ET SEQ., VERNON'S TEXAS CIVIL STATUTES).
	THE PURPOSE OF THE CONVERSION IS TO ACHIEVE SAVINGS AND USE 
THE MONEY SAVED TO FURTHER THE PURPOSES FOR WHICH THE (NAME OF 
COMMUNITY TRUST) WAS CREATED.
	A HEARING ON THE PETITION IS SCHEDULED ON (DATE AND TIME) AT 
(LOCATION OF COURT).
	FOR ADDITIONAL INFORMATION, YOU MAY CONTACT THE GOVERNING 
BODY OF THE (NAME OF COMMUNITY TRUST) AT (ADDRESS AND TELEPHONE 
NUMBER) OR THE COURT.
	(e)  The court shall schedule a hearing on the petition to be 
held after the 10th day after the date the notices required by 
Subsection (d)(2) are deposited in the mail or the date the notice 
required by Subsection (d)(3) is published, whichever is later.  
The hearing must be held at the time and place stated in the notices 
unless the court, for good cause, postpones the hearing.  If the 
hearing is postponed, a notice of the rescheduled hearing date and 
time must be posted at the courthouse of the county in which the 
proceeding is pending or at the place in or near the courthouse 
where public notices are customarily posted.
	(f)  The court, on a request from the governing body of the 
community trust, may by order require approval from the Internal 
Revenue Service for an asset transfer under this section.  If the 
court orders approval from the Internal Revenue Service, the asset 
transfer may occur on the date the governing body of the community 
trust files a notice with the court indicating that the Internal 
Revenue Service has approved the asset transfer.  The notice 
required by this subsection must be filed on or before the first 
anniversary of the date the court's order approving the asset 
transfer is signed.  If the notice is not filed within the period 
prescribed by this subsection, the court's order is dissolved.
	(g)  A court order transferring the assets of and terminating 
a community trust must provide that the duties of each trustee of 
each component trust fund of the community trust are terminated on 
the date the assets are transferred.  This subsection does not 
affect the liability of a trustee for acts or omissions that 
occurred before the duties of the trustee are terminated.

Added by Acts 1999, 76th Leg., ch. 1035, § 1, eff. Sept. 1, 1999.          

Last modified: August 11, 2007