Trustee Best Practices
Note: Best practices are methods that have worked well over time in many communities. Best practices are not necessarily law and do not replace RSAs or Attorney General opinions.
Trustees should list their names, telephone numbers and their term expirations on the municipality’s website for optimum citizen access.
Trustees should post an annual schedule of trustee meetings on the municipality website. Trustees should meet at least quarterly to accept new funds, review current investments, process requests for distributions, and sign policies and reports.
Trustees must post meeting notices in at least two locations, such as the municipal office and the local library. The municipality website may count as one such location. Although RSA 91-A:2, II requires meeting notices to be posted only 24 hours in advance, a best practice is to post upcoming meetings at least one week in advance to foster greater citizen attendance and to promote transparency in government. The meeting notice should include an agenda.
Trustees must make the minutes of trustee meetings available within five days of the meeting (RSA 91-A:2, II). Posting the minutes on the municipality website is an easy way to meet this requirement.
Trustees should ask selectmen to fill vacant trustee positions with trustworthy citizens promptly. See RSA 31:22.
Trustees must obtain signed vouchers requesting funds prior to making distributions from the trust and capital reserve funds. These vouchers must be kept on file by the bookkeeper. See RSA 31:22.
Trustees should stay mindful of the eroding effects of inflation and the loss of purchasing power. Trustees should seek investments with average annual total rates of return that exceed the annual rate of inflation.
Trustees must formally adopt an investment policy and file the investment policy with the Charitable Trusts Unit at the Attorney General’s Office. The best practice is to review and confirm the investment policy at the same time as the MS-9 and MS-10 are reviewed and signed. See RSA 31:25.
When trustees invoke the Prudent Investor Rule for trust funds according to RSA 31:25-d, Trustees must:
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Notify the Attorney General's Office, Charitable Trusts Unit, in writing.
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Hire or employ the trust department of a bank or brokerage firm to provide investment advice and assistance under RSA 31:38-a, III.
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Conduct quarterly reviews of the portfolio(s). See RSA 31:38-a, III.
When preparing the MS-9 report, the bookkeeper should list the trust funds first, followed by the capital reserve funds.
On the MS-9, interest and dividends are posted to income.
On the MS-9, short-term and long-term capital gains are generally credited to principal. Exceptions apply.
Contributions to trust funds and capital reserve funds are credited as additions to principal.
Non-expendable trust fund withdrawals may not exceed the income balance. The ending balance can never be negative.
Withdrawals from expendable trust funds and capital reserve funds should deplete income to zero, and then reduce principal as necessary to complete the distribution.
Withdrawals from principal should not be listed in the "Expended" column of the Income portion on the MS-9.
The bookkeeper trustee should have another trustee verify the math on MS-9 and MS-10 reports before submitting them.
The MS-9 is the proper place to list all of the perpetual care funds, by decedent's name. Each perpetual care trust must be listed as a separate line. Perpetual care trusts are not listed individually on the MS-10.
The MS-10 should list only the names of the common funds and how the common funds are invested. When an investment advisor is employed, the MS-10 footer should list the name of the investment advisor, the fees paid, and a certification that the fees were paid from income only.
Trustees should file MS-9 and MS-10 reports with the Charitable Trusts Unit and the Department of Revenue Administration by February 28 (calendar year municipalities) or by August 31 (fiscal year municipalities).
We invite trustees of trust funds to share your best practices or comments with us so that we may post them for others to use. Submit your comments via email to: info@threebearings.com
