Hey everybody, welcome back to Explanation 5, the podcast where we take the questions you've always wanted to ask and talk about them in a way that's easy to understand. We are your hosts, I'm Tim. Hey everyone, my name is Kevin. Today we're talking about the royal family.
Oh, but Tim, there's so many royal families, which one are we talking about? Ah, yes, that's important to clarify, the British royal family we're talking about. Ah, yes, got it. Okay, so what are we talking about here?
So the first question is, how does the British royal family make money? Hmm, yes. So as far as the British royal family, they actually have three sources of royal income. But if you're asking about Harry and Meghan before deciding to step back from their royal duties, 95, actually 95% of the couple's income came from Prince Charles' income from the Duchy of Cornwall.
Ah, what's the Duchy of Cornwall? Mm-hmm. It's actually a crown entity holding both land and a bunch of other assets to basically produce an income for the monarch's eldest son. So it was actually established all the way back in 1137, and it consists of land and properties in 23 English counties and a whole portfolio of different investments.
It's actually one of two royal duchies in England, the other being the Duchy of Lancaster. So the eldest living son of the reigning British monarch inherits possession of the duchy and therefore the title Duke of Cornwall at birth or when his parents succeed to the throne. So right now the current Duke is Charles, Prince of Wales. Okay, so that's one source of income, and you said that there were three sources, this one being 95%.
Where does the other 5% come from? Right, so the duchies are two sources. The other, the Duchy of Lancaster, goes to Queen Elizabeth II. For Harry and Meghan, the third source is actually taxpayer-funded sovereign grants made up the other 5% of their income.
It's an important pillar. So if we step back a bit, most of Queen Elizabeth II, Prince Philip, and her children's annual income and expenses are paid through those three sources. The private Duchy of Cornwall, which we just mentioned, the Duchy of Lancaster, and finally the public sovereign grant. And then on top of that, there's also inheritance.
Ah, got it. Okay, so three sources of income, and we will get back to inheritance in the Prince Harry case towards the end. But for now, can you explain this sovereign grant? So the sovereign grant is paid from the government to the royal family to cover expenses for the official duties and looking after the royal palaces.
It is worth about 90 million bridge pounds per year, so that's just over 100 million U.S. dollars, and it's funded by profits from the Crown Estate, which is a state set of commercial properties owned by a crown. Let's explain that a little bit. The Crown Estate?
Yeah, there's such a thing called the Crown Estate. The Crown Estate is one of the largest property managers in the whole United Kingdom, administering property worth about 14 billion pounds of AUM. That's assets under management. So it's basically a collection of land and other holdings in the territories of England, Wales, and or Ireland within the U.K.
belonging to the British monarch as a corporation's soul. It is, quote-unquote, the sovereign's public estate, which basically means it's neither a government property nor part of the monarch's private estate. So, you know, there's a lot of groups of things here, right? So the Crown Estate, it doesn't belong to the government, but the Crown gives the proceeds of the property to places like Parliament to help fund the government.
And Parliament, in turn, gives 15% of that money back to the Crown. So while the Queen is technically exempt from taxes, she is effectively taxed at 85% due to the nature of that aforementioned deal. So it's not actually the Queen's wealth, then. It comes with the position of the monarchy.
Right, right, exactly. And it's kind of hard to distinguish between the Queen and the Crown. But basically, in the 1800s, a government was moved from palace to parliament, as well as revenue. So the civil list was established so that the king could continue to live as he had grown accustomed to, so there was no trade or sacrifice on the monarch's part.
There is no personal claim on the Crown Estate, and it remains part of the government. I see. Now, for this income, what exactly does the royal family do, especially to our American listeners out there? So the royal family, they play, currently, they play a pretty large symbolic role, and most of their duties involve putting on, you know, social functions and entertaining guests, as you might imagine.
Technically, they do hold some political power, though, albeit they try to stay neutral. To define it precisely, in the Unconfined Constitution of the United Kingdom, the monarch, otherwise refers to as, you know, the Sovereign or His or Her Majesty, is the head of state. So one example here could be that the Queen must give royal assent to a bill before it passes, and it becomes law. In that sense, the monarch has the power to veto a proposed legislation.
It's kind of similar to the President of the United States. The Queen actually does formally appoint the Prime Minister and dissolves parliament. And she also has a role in what's called a hung parliament, where, you know, there is no clear winner. Otherwise, generally, the monarch tends to stay out of politics.
Now, the monarchy can be quite large as a family, but one question that people ask is, how far removed from the Queen of England does one need to be to be considered part of the royal family? I think there is, so I think how it goes is, the British royal family comprises of Queen Elizabeth II and her close relations. Now, there is no strict legal or formal definition of who is or who is not part of that family. Those who at the time are entitled to the style of His or Her Royal Highness, or any style of His or Her Majesty, are normally considered members, including those styled before the beginning of the current monarch's reign, which has been a very long reign.
So by criterion, a list of the current royal family will usually include the monarch, the children, the male-lined grandchildren of the monarch, and previous monarchs, the children of the eldest son of the Prince of Wales, and all their current or widowed spouses. Now, if you were, though, here's a question that ultimately everyone wants to know, which is, how much is the Queen worth? Oh, wow. The Queen's worth.
So estimates of the Queen's wealth do vary quite a bit. You know, there's no official figures. And depending on, you know, if you're counting what your assets owned by her personally are held in trust for the nation included, but I can give you, you know, four pretty different numbers that have been thrown out there. So one is Forbes magazine one time estimated her wealth at $450 million.
In another case, in 1993, the Lord Chamberlain said estimates of £100 million were grossly overstated for some reason. In another case, a guy by the name of Jacques Colville, who was the Queen's former private secretary and a director of her bank, Colts, estimated her wealth back in 1971 at only £2 million, which, you know, which is probably about £28 million today, but, you know, still not a far cry from Forbes magazine's quote of $450 million. Wow, yes, that last one does seem like a small number after hearing, $450. So what's the fourth number that you have?
Oh, so the fourth number, probably the biggest headline number, the Queen was once number one on the Sunday Times Rich List's Top 300 Most Wealthy List when it began in 1989, with a reported wealth of £5.2 billion British pounds, which did include state assets that were technically not hers personally, and adjusted for inflation, that's approximately £13 billion in today's value. These days, they usually exclude her from those lists. I see. Interesting.
So Prince Harry lost the Duchy of Cornwall income and the Sovereign Grant income, but he did also have one final source of money, which was an inheritance. How much did Prince Harry inherit then? Yes, so the esteemed Harry has received an inheritance from his mother, Princess Diana. Princess Diana left him and his brother, Prince William, her wealth after she died, and after taxes, the half that Harry received upon turning 25 years old was estimated to be around $13 million USD.
Did you learn something new? If you did, send us an email. We always love hearing from you, especially when you have suggestions for what we should cover in future topics. As always, thank you to the wonderful community at r slash excellent income 5.
We will see you all next week.