He’s already not short of a bob or two, but on 21 June, his 30th birthday, Prince William will become a whole lot richer when he inherits up to £10 million from Princess Diana’s estate.
The news has sent royal watchers into a frenzy trying to predict what he will do with his windfall. The hottest rumour is that he and wife Kate, who currently live in apartments at Kensington Palace, will begin hunting for a country home, possibly one close to Daddy’s Highgrove estate near Tetbury in Gloucestershire.
This was not what his mother intended. In her will, her sons were to inherit the estate at 25. This was changed after her death by her executors
After Diana’s death in 1997, the estate, comprising cash from her divorce settlement, stocks and shares, jewellery, clothing and other personal belongings, was worth just under £13 million after inheritance tax. Since then it has reportedly grown to £20 million.
This was divided equally between the two princes, so Harry will also become a multi-millionaire when he reaches 30 in 2014.
Intriguingly, though, this arrangement was not what his mother intended. In her will, her sons were to inherit the estate at 25. But this was changed after her death when the executors – Diana’s mother and sister – asked the High Court to modify this to 30.
While there are no doubt special circumstances (and special amounts of money) in this case, the same decision is faced by us humble commoners when making a will. At what age should your children inherit your money, should you meet with an untimely end?
“When advising parents on this, I usually default to the age of 25,” says inheritance practitioner Ade Oduyemi of Max Inheritance. “I ask my clients to look back at themselves at 18 or 21 and imagine what would have happened to the money if they had inherited half a million pounds at that age. They usually don’t like to think about it!
“After that, I suggest that 25 is a reasonable age to inherit the bulk of the cash, with the money managed on their behalf until then, allowing them reasonable expenses – for instance to buy a car or put a deposit on a flat – but making sure it isn’t frittered away.
“If you can’t manage a fairly modest estate by the time you are 25, there is probably no hope for you!”
Age has its benefits
Celia Dodd, high50’s brilliant expert on families and relationships, takes a similar view. “I’m not sure why 25 feels like the right age for kids to inherit, but it does, because people mature and discover so much more about the realities of life between 18 or 21 and 25,” she says.
“However, I think parents need to be wary of assuming their kids won’t be responsible about money. Often our children may be much more grown up about all sorts of things than we give them credit for.
“There may also be an issue of control: it is natural to want to influence what the money is spent on, but it’s not reasonable.”
Ade says he has witnessed that attempt at control many times, with people asking for special clauses to be added to their wills specifying what can be done with the money. “I have heard all sorts of things, from fathers deciding who their daughters should be allowed to marry to a recent client who had a valuable collection and wanted to make sure his child kept it and didn’t sell it off.
“I told him I would be delighted to do this, but of course it would need policing, so someone would have to visit his child each month and check that all of the collection was still there. And of course charge them an hourly rate for doing it!
“This sort of clause is impractical. It could cost the estate a lot of money. And, if the beneficiary decides to challenge it in court, these challenges are in the main successful.
“I remember one recent case where the judge ruled in the beneficiary’s favour and said it was unreasonable for people to play God from beyond the grave.”
Celia, whose book The Empty Nest: How to Survive and Stay Close to Your Adult Child goes into more detail on the subject of money and kids, says the current financial climate can also affect parents’ decisions.
“One factor is the scarcity of graduate jobs (obviously not the princes’ problem). And this could influence parents either way. Most wouldn’t want an inheritance used as an excuse not to get a job.
“On the other hand, it could be a valuable source of security while finding the right career. After all, many parents now help their kids get a foot on the property ladder.”
Of course, the beneficiary doesn’t have to take all that is on offer. A second theory currently being proposed by royal commentators is that instead of William taking his entire share of the estate, he may vary this to give Harry a larger amount, as William will one day inherit many more millions from the Duchy of Cornwall.
“There is nothing to stop a variation like this being made, as long as the beneficiaries agree it between themselves,” says Ade.
He adds that William and Harry should both be grateful for Diana’s foresight in making a will back in 1993. “There is a set formula for the way estates are divided up if there is no will. Many more people, including Diana’s parents and siblings, would have had a claim.
“So if there had been no will, the princes would have inherited a much smaller part of the estate. Exactly the same rule also applies to us run-of-the-mill folk!”
For commoners making these vital decisions, Celia says: “As always, it depends hugely on each child. If they are extravagant or like drink or drugs, that is bound to influence your decision, and delay the inheritance for some years. And some kids are better at managing budgets than others, which may have something to do with what you have passed on about your own attitudes to money.
“Finally, I think parents need to think about managing their kids’ expectations. There is always a danger that your offspring will make assumptions about what they’ll inherit, and it may influence their decisions about their future.”
So until next month, young William, you take care. Uneasy sits the crown…
The empty nest: On a wing and a prayer
On wills: Hey, you, look after my cloud!
From our archive: Diana at 50