The Crown Prince of Britain inherits a 7-century-old property worth a billion dollars

The Crown Prince of Britain inherits a 7-century-old property worth a billion dollars

(CNN Business)–Properties are not made public. This means that what happens to much of the personal fortune of the late Queen Elizabeth II after her death last week will remain a family secret.

Forbes estimated last year that the late queen’s personal fortune was worth $500 million, consisting of her jewelry, art collections, investments and two homes, Balmoral Castle in Scotland and Sandringham House in Norfolk. The Queen inherited both properties from her father, King George VI.

“(Property wills) are hidden, so we really have no idea what’s inside and what’s worth, and it was never made public,” Laura Clancy, a lecturer in media at Lancaster University and author of a book on royal finances, told CNN Business.

But the bulk of the royal family’s fortune – totaling at least 18 billion pounds ($21 billion) in land, property and investments – now passes along a centuries-old path to the new monarch, King Charles, and his heir.

The line of succession makes Prince William, now first in line to the British throne, a much richer man.

The future king inherits the private estate of the Duchy of Cornwall from his father. The duchy owns a sprawling portfolio of land and property covering nearly 140,000 acres, mostly in southwest England.

The property was established in 1337 by King Edward III, and is worth about 1 billion pounds ($1.2 billion), according to his calculations for the last financial year.

The Duke of Cornwall’s website says the proceeds from the estate are “used to fund the public, private and charitable activities” of the Duke. This title is now held by Prince William.

By far the largest slice of the family’s fortune, the £16.5 billion ($19 billion) Crown Estate, now belongs to King Charles as the reigning monarch. But under an arrangement dating back to 1760, the king hands over all the profits of the estate to the government in exchange for a tranche called the Sovereign’s Grant.

The estate includes swathes of real estate in central London and the seabed around England, Wales and Northern Ireland. It has the status of a corporation and is run by a chief executive and commissioners – or non-executive directors – appointed by the king on the recommendation of the prime minister.

In the last financial year, it generated a net profit of around £313 million ($361 million). Of that, the British Treasury paid the Queen a sovereign grant of 86 million pounds ($100 million). This equates to £1.29 (US$1.50) per person in the UK.

Most of this money is spent on maintaining the royal family’s property and paying the salaries of its employees.

The sovereign grant is usually equivalent to 15% of the estate’s profits. But in 2017, the payment was raised by up to 25% for the next decade to help pay for Buckingham Palace renovations.

King Charles also inherited the Duchy of Lancaster, a private estate that dates back to 1265 and was valued at £653 million ($764 million) according to its most recent calculations. Income from its investments covers official costs not covered by the sovereign grant, and helps support other members of the royal family.

Restrictions apply

Despite the enormous sums, the king and his heir are restricted in the amount of personal benefit from their wealth.

The king can spend the sovereign grant only on royal duties. Neither he nor his heirs are allowed to benefit from the sale of assets in their duchies. Any profit from the disposals of the estate is reinvested, according to an explanation published by the Institute of Government (IfG).

IfG said the UK Treasury must also approve all large property transactions.

However, unlike the sovereign grant offered by Crown Estates, both duchies are private sources of wealth, meaning their owners are not required to provide any details other than reporting their income, according to the IFG.

Last year, King Charles, then Duke of Cornwall, paid £21m ($25m) from the Duchy of Cornwall’s estate.

Neither Prince William nor King Charles are obligated to pay any form of property tax, although both duchies have voluntarily paid income tax since 1993, according to the IFG.

Clancy said the move came a year after the royal family came under fire for planning to use public money to repair Windsor Castle, which was damaged in a fire.

“Of course, the voluntary income tax is (not) a flat rate, and they don’t have to declare how much income they get from their taxes,” she added.

Buckingham Palace did not immediately respond to CNN.

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