Modern Board of Trustee Meetings Require a Modern Trust Agreement

The global pandemic has had a substantial impact on all our lives. Nearly every aspect of our day-to-day life has changed in some way. In the Taft-Hartley fringe benefit world, many Boards of Trustees have been forced to meet virtually as opposed to meeting in person since the pandemic began. Only just recently have most Plans began to meet in person again. While the preference may be for Trustees and their service providers to meet in person, some individuals may dial-in or attend via web conference. However, the Plan should make sure that its Trust Agreement permit this type of action.

First, remember what a Taft-Hartley fund is. It is a fund of assets that is used solely to pay benefits according to a Plan document. This framework is known as a trust and has been around since long before the Taft-Hartley Act. Legally, a trust is governed by a Trust Agreement, which sets forth the rules governing this pool of assets, including, who is in charge, how decisions are made, and how assets can be used.

As you probably know, the individuals empowered with decision making authority over trust assets are called trustees. Thus, the Trust Agreement provides rules for how Trustees are appointed, what powers they have, and relevant to this discussion, when and how they can meet. Newer Trust Documents will specifically state that the Trustees may meet in person, via telephone, or via web conference. However, if your Plan’s Trust Document was written in the 1990’s or earlier, it may not specifically state that a Trustee can attend a meeting via web conference or even by telephone. While this may seem like a formality, there can be consequences if one or more Trustees meet under circumstances not called for in the Trust Agreement, such as any decision made by the Trustees being invalidated.

If it has been several years since a Trust Agreement has been updated, it may be a good time to have it done. The Department of Labor typically expects to see Trust Agreements restated every 10-15 years. Remember, the trustees of a plan derive their authority from the Trust Agreement. In other words, they can only take the actions specified in that document. Therefore, it is important to make sure that the Trust Agreement as written matches what is being done in practice.