Queen Elizabeth II's death is prompting an outpouring of grief around the world and bringing parts of the UK to a standstill ahead of her state funeral on Monday. Less visibly, it also set in a motion a wholesale restructuring of the royal family's finances.
Officially established as long ago as 1337, the major estates that help to fund the British monarchy are now all serving a new generation of the Windsors. It's no ordinary wealth transfer, with the various inheritances following paths set down for centuries and holdings as varied as London offices, the UK's seabed and a prison.
King Charles III, 73, is now entitled as Britain's sovereign to a slug of income from the Crown Estate -- the largest of the investment entities linked to the UK monarchy -- as well as from a private estate, the Duchy of Lancaster. Meantime, his eldest son William, 40, has inherited the Duchy of Cornwall, after succeeding his father as Prince of Wales and next-in-line to the throne.
The Crown Estate and royal duchies oversee total assets of about £18.2 billion ($21 billion) with their values rising about 70% on average over the past decade, according to data compiled by Bloomberg. That largely mirrors rising land and property prices.
"It's a whole business concept," David Haigh, chief executive officer of consultancy Brand Finance, said of the royal assets. "They have all these tangible assets and operating costs."
The changes illustrate the ancient financial arrangements for Britain's monarchy, which operate in a wholly different way to the fortunes of most inheritance battles.
For one, the most valuable assets aren't even owned by the royals. The British monarchy and its possessions, including the Crown Jewels and the Royal Art Collection, belongs to the ruling sovereign, but it's not their private property and cannot be sold by them. The UK's new head of state doesn't pay inheritance tax on them or on anything he receives from his mother's personal estate.
King Charles and his family are funded for their official duties through the Sovereign Grant, an annual lump sum derived from a 1760 agreement between the monarch and the British government that's typically as much as quarter of the profits from the Crown Estate, whose holdings include Regent Street, a popular retail destination featuring high-end fashion stores as well as toy shop Hamleys.
The grant for the year to March 2023 is £86.3 million, unchanged from the 2022 period, when most of the proceeds went towards maintaining royal palaces and staff compensation. A spokesman for the Crown Estate described it as a "unique business with a diverse portfolio," noting the profit it has generated for the nation has totalled £3 billion over the last ten years.
Profits from the Duchy of Lancaster, which owns 18,481 hectares (45,667 acres) of land across England and Wales, provide income for the UK's sovereign and has helped to fund the activities of other British royals.
They include Prince Andrew, 62, the Queen's second son, who settled a US lawsuit at the start of this year for an undisclosed sum over claims he was one of several men to whom Jeffrey Epstein "lent" Virginia Giuffre for sexual abuse. He's consistently denied the allegations.
The Duchy of Cornwall - around 53,000 hectares of land mostly in the south west of England as well as Dartmoor Prison - provides a similar funding arrangement for the Prince of Wales and his family. Prince Charles, for example, previously supported Prince Harry, 38, and Meghan Markle, 41, with millions of pounds before they stepped back from royal duties in recent years and moved to the US.
While both royal duchies publish annual accounts, neither provides a full breakdown of funding arrangements for individual members of the royal family. The duchies have reported distributable income totaling about £430 million over the past decade, according to data compiled by Bloomberg.
"The real question is whether there's an incremental economic benefit for the UK against the cost of the royal family," said Haigh, whose firm has estimated that Britain's monarchy brings in more than £1 billion a year to its nation. "They seem to be running the transition very well from a propaganda point of view, creating a lot of empathy for Charles and Camilla as well as William and Kate."
A seamless handover doesn't mean there won't be changes. Members of staff at Clarence House - King Charles' previous residence - have been told some redundancies are "unavoidable," the Guardian has reported, adding to the scrutiny on the new sovereign that's even included the adequacy of his pens.
The Queen also had her own personal fortune, partly through assets inherited from her parents including her residence at Balmoral, where she passed away. She had a net worth of about $400 million, spanning one of the world's largest stamp collections and horse stables in addition to her real estate holdings, according to the Bloomberg Billionaires Index.
As monarch, King Charles is exempt from inheritance tax on assets he receives in his mother's will. He and the Queen have paid income and capital gains tax on funds from their private estates under deals reached almost two decades ago with the UK government as pressure grew over who would pay to restore Windsor Castle after its 1992 fire.
As with other royals, the precise details of the fate of the Queen's personal fortune will likely remain a secret. A London judge has a safe containing more than 30 envelopes that are the wills of deceased members of Britain's royal family dating back more than a century. The will of Prince Philip, the Queen's late husband who died last year aged 99, is set to remain sealed for almost a century.
The UK tax authorities "will get to see the details" of any financial arrangements in the Queen's will, said Dan Neidle, founder of not-for-profit advisory firm Tax Policy Associates, said. "The British public won't."
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