(a) Criteria for being a qualified replacement beneficiary. An individual may be the qualified replacement beneficiary of a savings trust agreement if:      
        (1) the individual is a member of the family of the former beneficiary who satisfies the requirements of Internal Revenue Code of 1986, §529(e)(2), as amended, so that the change of beneficiary is not treated as a distribution under that law; and       
        (2) documentation that evidences the relationship between the individual and the former beneficiary is submitted to the plan manager that has custody of the savings trust account.       
      (b) Conditions for replacement of beneficiary. The owner of a savings trust agreement may replace the beneficiary of that agreement with another individual only if:      
        (1) the individual is a qualified replacement beneficiary as described in subsection (a) of this section; and       
        (2) the owner pays to the plan manager that has custody of the savings trust account any fees that are required under the board's administrative fee and service charge schedule.       
      (c) Notwithstanding subsections (a) and (b) of this section, an account owner that is a state or local government entity (or agency or instrumentality thereof) or an organization described in Internal Revenue Code of 1986, §501(c)(3), and exempt from taxation under §501(a) of that code as part of a scholarship program operated by such government or organization, may replace the beneficiary of a savings trust agreement regardless of whether the replacement beneficiary is a member of the family of the former beneficiary.     
     Source Note:        The provisions of this §7.110 adopted to be effective July 14, 2002, 27 TexReg 6044; amended to be effective June 27, 2012, 37 TexReg 4598