Legal Summary

The following is a simple, brief legal summary. We are lucky that there are not many legal hoops and concerns.

In 2019, the General Conference passed a limited provision for local churches to disaffiliate from the UMC.  A benefit of the provision is the suspension of the Trust Clause.  Since the time of Wesley, local churches are assumed to hold all property and assets in trust for the greater Methodist church.  Upon signing the Disaffiliation Agreement, the local church is released from the implied trust and the UMC has a contractual duty to execute a deed to the local church.   

Upon disaffiliation, the church will no longer be included under the UMC’s group tax exemption.  However, as a church, it is automatically considered a federal tax-exempt organization.  It may operate in the same manner as before until whatever time it may come under a different denomination’s group exemption.  Christ UMC is incorporated as a Texas non-profit organization and is exempt from state franchise and sales tax.  But for the need to notify the State of a name change, it may continue to operate as such.  

The church corporate officers will review all of its governing documents to address any needed amendments for name change or dissolution provisions.  The church leadership may determine that it is necessary to hire an attorney to assure that all documentation is done accurately to assure property rights and consider tax implications. 

 Resources: 

Provisional Disaffiliation:  https://www.txcumc.org/files/navigating+the+waters/local+church+disaffiliation/new+docs/revisions/2553+disaffiliation+agreement-+revised+6.21.22.pdf 

Trust Clause:  https://www.umc.org/en/content/ask-the-umc-what-is-the-united-methodist-trust-clause 

Tax Exemption: https://www.irs.gov/charities-non-profits/churches-integrated-auxiliaries-and-conventions-or-associations-of-churches