I recently came across an interesting article published by STEP titled “Held to Ransom” written by Robert Mack.  The article outlines several considerations for those setting up trusts in circumstances where it is conceivably possible that the beneficiary (or beneficiaries) of the trust could be kidnapped for ransom.

While the prospect is not pleasant, in some circumstances and for some individuals it may not be entirely far fetched. Our world is becoming increasingly globalized. We are travelling to and residing in countries, which historically, most of us would never have had the opportunity to venture to. Unfortunately, some of the countries we now have the opportunity to visit have an increased prevalence of kidnapping.  This includes kidnapping for political and ideological reasons as well as kidnapping for the sole purpose of obtaining a hefty ransom.

In fact, Mack describes kidnapping as a “booming” industry, with worldwide numbers increasing annually.  As such, it is possible that the inclusion of a kidnap provision in trust deeds, and even the creation of ransom trusts, could become increasingly common in the years to come.

Mack describes how a ransom demand does not necessarily fall neatly into a power to appoint, pay, apply or advance. As such, where there is any possibility that the settlor, beneficiary or a family member might be kidnapped it might be prudent to include a specific power in the trust deed to allow the trustee or some other person to pay the ransom out of the trust fund.

He goes on to state that although many trust deeds have the power to make payments on behalf of a beneficiary ‘to or for his or her benefit’, an interesting question arises as to whether such payment could be construed to be for the ‘benefit’ of such a beneficiary. Accordingly, if there is even a remote possibility of a kidnapping, it is important to ensure that clear provisions are included in the trust deed to empower the trustee or other power holder to pay the ransom demand.

There are, however, several different ways of incorporating a ransom provision into a trust deed and several important considerations for trustees who find themselves required to act in accordance with such a provision.  Mack’s article specifically outlines some of the different ways the inclusion can be structured as well as some of these key considerations for trustees in such circumstances.

Which countries have the highest incidence of kidnapping for ransom? An article published on Thrillist.com outlines the top 7 countries where you are most likely to get snatched.

Thank you for reading,

Ian Hull