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King Charles III with other members of the Royal Family follow the procession of the State Gun Carriage of Queen Elizabeth on Sept. 19.POOL/Reuters

Philippe Lagassé is associate professor and Barton Chair at Carleton University. Dale Smith is a freelance journalist and author in Ottawa.

King Charles III’s succession to the throne has sparked renewed interest in the Royal Family’s finances.

The New York Times recently reported that the King “inherits untold riches” from the Queen, totalling in the billions. The Duchy of Cornwall, an estate portfolio first established in 1337 to provide for the heir to the throne, has garnered attention as well, given the greater value it acquired under King Charles’s management. Since the Duchy is transferred to the new heir whenever there is a succession, Fortune wrote that Prince William inherited a US$1.2-billion estate “thanks to a medieval rule.”

Readers may be aghast at this, particularly since they are routinely told that the Royal Family is “taxpayer-funded” or even derided as “the world’s richest welfare family.” But a bit of fact-checking is in order. Above all, we need to be clear on who owns the vast estates that are being transferred.

The Crown Estate, the largest holding, is owned by the monarch in their legal capacity, not as a natural person. This means that the legal personality of the Sovereign owns the Crown Estate, not King Charles as an individual. Accordingly, the Crown Estate should be described as state-owned, since the Sovereign is the legal personality of the state in the United Kingdom.

The Duchy of Lancaster and the Duchy of Cornwall, which are separate from the Crown Estate, occupy a grey zone in terms of their ownership. They are held by the monarch and the heir as natural persons, and the individuals are entitled to income the duchies generate, but they are inalienable assets of the Crown held in trust to the institution. They are intimately connected with the Crown, the line of succession and the Royal Family’s official duties.

Members of the Royal Family do have their own personal wealth. Balmoral and Sandringham were the Queen’s personal property, for instance, and she also owned art and other assets. Altogether, the Queen’s personal wealth was estimated to be approximately US$500-million, according to Forbes, though the precise number remains a secret. When we speak of how much the King and other royals are inheriting from the Queen, these assets are what fit the commonly understood meaning of the term.

It should also be noted that the Queen did pay tax on her personal income and capital gains; the King will, too. In exchange, per a 1993 agreement with the British government, the monarch’s heir has been made exempt from paying the U.K.’s inheritance tax, in consideration of what then-prime minister John Major called the “unique circumstances of a hereditary monarchy.”

That’s because the monarch’s continued financial independence is needed to protect impartiality in the face of potential coercion or duress from partisan politicians, and thus to safeguard the monarch’s ability to act as constitutional guardians. We’ve seen repeated examples in Canada of opposition parties going after the expenses of the Governor-General, for instance, even at one point voting to reduce former governor-general Adrienne Clarkson’s allowance after objecting to a diplomatic trip she undertook at the behest of the government. If the Royal Family did not have the ability to withstand this kind of threat, members could be pressured into making tacit alliances with partisan politicians or cowed by bad-faith political actors.

Are the royals taxpayer-funded on top of these official and personal estates? Not exactly. Saying that conflates citizens and the state.

Yes, the monarch receives an annual Sovereign Grant to pay for official expenses, including travel and renovations to official residences, but not their private estates. Last year, this grant was £86.3-million. But each new monarch symbolically signs over the revenues of the Crown Estate to the British Treasury, reflecting an agreement dating from the reign of King George III, and the Treasury then provides the monarch with the grant. The Sovereign Grant has also been indexed to 25 per cent of the annual profits that the Treasury gets from the Crown Estate for the last five years, to cover the costs of renovating Buckingham Palace, an official residence. That share means that the Crown Estate remains a net money-maker for the Treasury.

That said, as the Sovereign Grant’s share of the Crown Estate’s profits has increased, there have been legitimate concerns about how much money the Royal Family should be getting from the Treasury, particularly after a decade of austerity measures and with a looming cost of living crisis on the horizon.

Since the profits from the Crown Estate go to the Treasury before the Sovereign Grant is disbursed, the relationship between the profits and the grant has effectively become obscured, leading to confusion about how the Royals are financed. When we are told that the Royal Family is taxpayer-funded, this refers to the Sovereign Grant; but ”taxpayer” is being used as a shorthand for the state, which is really a euphemism for the Sovereign’s legal personality. So, it is more accurate to say that the Royal Family are state-funded.

In sum, the royals are no doubt very rich – but taxpayer-funded billionaires they are not.

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