In a recent primetime interview with his wife, Meghan Markle, Prince Harry revealed that his family had “cut him off financially” on short notice during the first quarter of 2020, leaving him unable to afford security for his family. However, Harry was able to access the inheritance he received following the death of his late mother, Princess Diana, and embark on a new life in the U.S. Harry told Oprah Winfrey, “I've got what my mum left me, and without that, we would not have been able to do this.”
All that glitters is not gold
Few would have expected that Prince Harry — grandson of the reigning monarch and son of the crown prince — would ever find himself in dire financial straits. Few, that is, except Prince Harry's late mother. In response to Winfrey's question about what his mother would have thought of his being cut off from the royal coffers, Harry replied: “What my mum would think of this? I think she saw it coming.”
Harry is referring to the reported 21 million pounds ($36 million), Princess Diana left to her sons following her untimely death in 1993. Diana's will reportedly divided her estate equally between her children, Princes William and Harry, and instructed the funds to be held in trust for their benefit until they each reach the age 25, presumably to ensure that neither prince squandered the inheritance during their youth.
The crown jewels
In accordance with a Memorandum of Wishes the late princess reportedly prepared the day after she executed her will, Princes William and Harry were also to receive all of Diana's jewelry and three-quarters of her personal effects (gowns, art works, letters, etc.), referred to as “chattels.” Diana directed that the one-quarter balance of her chattels be divided among her 17 godchildren.
A memorandum or letter of wishes sets out a testator's gifts of specific personal effects, but one must be careful about how it is drafted. If the letter is incorporated formally into a will, it will constitute a testamentary disposition, and it will be legally binding. If the letter is not incorporated into the will, it will be “precatory” in nature or, merely an expression of wishes. On one hand, precatory wishes allow a testator the flexibility to change their wishes without needing to see a lawyer to update their will, and also enable a testator to give valuable gifts while shielding the estate from potentially significant estate administration tax. On the other hand, while an estate trustee has a moral obligation to give effect to a memorandum or letter, they are not bound by precatory wishes.
Once more unto the breach
It appears that Diana's Memorandum of Wishes was in fact a testamentary disposition rather than a precatory expression, because her mother and sister, acting as her executors of the estate, sought and obtained a court order varying the terms of the memorandum to give Diana's 17 godchildren a single memento, chosen by the executors, rather than dividing 25 per cent of her personal effects among them. The effect was that Diana's chattels, including her wedding gown, spent 17 years travelling the world for public viewing, generating millions. It has been reported that the proceeds have been donated to a charity in the late princess' name. Princes William and Harry, presently aged 38 and 36, respectively, now control those chattels, and can make their own decisions about how, if at all, they are used.
The executors also sought and obtained a variation of the will to delay the distributions to William and Harry by five years, until each of the princes turned 30. Presumably, the inheritance would have continued to earn interest for the princes during the additional years it was held for their benefit. It is unlikely that either of the princes had any pressing need for the funds in the interim in any event.
Self-rule
It appears that Prince Harry found his late mother's estate planning to be a prescient warning, telling Winfrey that he believes Princess Diana would feel “angry” and “sad” about his stepping back from the royal family, and that he has “felt her presence throughout this whole process.” Prince Harry's journey to independence is yet another reminder of the power and protection of a thoughtful estate plan, and of the fact that everyone — even royalty — must plan for the unexpected.
Originally Published by The Lawyer's Daily, 16 March 2021
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