Tex.
Prop. Code Section 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 (2008), 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 Nonprofit Corporation Law, as described by Section 1.008 (Short Titles)(d), Business Organizations Code, 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:(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 NONPROFIT CORPORATION LAW.(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.
Source:
Section 112.058 — Conversion of Community Trust to Nonprofit Corporation, https://statutes.capitol.texas.gov/Docs/PR/htm/PR.112.htm#112.058 (accessed Apr. 13, 2024).
