Three reasons why the richest family in the UK have kept their
wealth intact for 300 years
wealth intact for 300 years
On 9 August 2016, 25-year-old Hugh Richard Louis Grosvenor
became the billionaire 7th Duke of Westminster, when his father, Gerald
Grosvenor, suddenly died of a heart attack aged 64.
became the billionaire 7th Duke of Westminster, when his father, Gerald
Grosvenor, suddenly died of a heart attack aged 64.
The Duke and his family are estimated to be worth at least £10.1
billion (US$13 billion), according to the Sunday Times Rich List in May 2019. The
exact amount of wealth is difficult to estimate, since most of it is held in
trusts.
billion (US$13 billion), according to the Sunday Times Rich List in May 2019. The
exact amount of wealth is difficult to estimate, since most of it is held in
trusts.
The current Duke is the world's richest person aged under 30.
Other families appear higher on the Sunday Times list, but privately held property
is undervalued compared to company shares on the stock market, and very few
people have stayed in the top 10 as long as the Dukes of Westminster.
Other families appear higher on the Sunday Times list, but privately held property
is undervalued compared to company shares on the stock market, and very few
people have stayed in the top 10 as long as the Dukes of Westminster.
How have this extraordinary family maintained their vast wealth,
passing down through the generations for 300 years? As the Chinese say, most family
fortunes disappear after only three generations.
passing down through the generations for 300 years? As the Chinese say, most family
fortunes disappear after only three generations.
The first reason is smart tax planning.
If the Grosvenor estate been bequeathed directly to the young
Duke, he would been liable for 40% inheritance tax, not far off the Treasury’s death
duty take for the last financial year. Inheritance tax (IHT) usually involves
selling off assets in order to pay the tax, which would wipe out the fortune
within a few generations.
Duke, he would been liable for 40% inheritance tax, not far off the Treasury’s death
duty take for the last financial year. Inheritance tax (IHT) usually involves
selling off assets in order to pay the tax, which would wipe out the fortune
within a few generations.
Hugh Grosvenor, like his father, legally avoided a massive
amount of tax on his £10bn inheritance because the majority of assets
within the estate are held in trusts.
amount of tax on his £10bn inheritance because the majority of assets
within the estate are held in trusts.
UK trust law ensures the survival of many of the country’s
largest fortunes, while less wealthy people and increasing the middle classes
are forced to sell off family homes to cover IHT demands.
largest fortunes, while less wealthy people and increasing the middle classes
are forced to sell off family homes to cover IHT demands.
The second reason their wealth is still growing for
centuries is the use of leases.
centuries is the use of leases.
The Grosvenor Estate’s
assets includes a privately owned property business which has £11.8bn
of prime property under management. The 300-year-old London property business started
in 1677 with 500 acres of then rural land covering much of Mayfair and almost
all of Belgravia – adjacent to Buckingham Palace and the home of Harrods in exclusive
Knightsbridge.
assets includes a privately owned property business which has £11.8bn
of prime property under management. The 300-year-old London property business started
in 1677 with 500 acres of then rural land covering much of Mayfair and almost
all of Belgravia – adjacent to Buckingham Palace and the home of Harrods in exclusive
Knightsbridge.
Grosvenor’s international property portfolio range from office
space in Silicon Valley, a science park in Edinburgh and the freehold on the
current US embassy in Grosvenor Square. Perhaps the most famous and exclusive
streets in the empire is Eaton Square, built close to the Houses of Parliament
during the housing boom after the Napoleonic wars.
space in Silicon Valley, a science park in Edinburgh and the freehold on the
current US embassy in Grosvenor Square. Perhaps the most famous and exclusive
streets in the empire is Eaton Square, built close to the Houses of Parliament
during the housing boom after the Napoleonic wars.
There was recently a listing on Rightmove for a flat in
Eaton Square for only £600,000. I thought, wow, that’s a bargain for an
exclusive address in Knightsbridge. Alas, I looked closer I discovered that it
was not such a bargain because the remaining lease was only 5 years.
Eaton Square for only £600,000. I thought, wow, that’s a bargain for an
exclusive address in Knightsbridge. Alas, I looked closer I discovered that it
was not such a bargain because the remaining lease was only 5 years.
The key to keeping hold of their assets is the use of leasehold
titles, which means the freeholds eventually comes back to the family.
titles, which means the freeholds eventually comes back to the family.
The final factor for keeping wealth together, and perhaps
the most important, is that the family take the long view and employ long term
planning.
the most important, is that the family take the long view and employ long term
planning.
Whilst most people plan to leave a legacy for their children
or grandchildren, the Grosvenors, and other super wealthy families like the Rothchild’s
or Rockefellers, think several generations ahead and have a wealth preservation
strategy.
or grandchildren, the Grosvenors, and other super wealthy families like the Rothchild’s
or Rockefellers, think several generations ahead and have a wealth preservation
strategy.
The previous Duke saw himself as the custodian of the family
fortune and struggled with the burden of keeping it all together. The responsibility
even led to his depression.
fortune and struggled with the burden of keeping it all together. The responsibility
even led to his depression.
The fact that the business is largely made up of investment
property from residential to some of the biggest farms in Britain is obviously
a major factor compared to a family business which can go out of fashion or
fail to adapt to changes. However, thousands of property businesses have gone
by the wayside and the UK is littered with country estates now owned by the National Trust because the once
wealthy aristocratic families could no longer afford to maintain them.
property from residential to some of the biggest farms in Britain is obviously
a major factor compared to a family business which can go out of fashion or
fail to adapt to changes. However, thousands of property businesses have gone
by the wayside and the UK is littered with country estates now owned by the National Trust because the once
wealthy aristocratic families could no longer afford to maintain them.
Summary
3 factors have kept the Grosvenor’s fortune intact:
1.
Trusts
Trusts
2.
Tax planning
Tax planning
3.
Long term planning
Long term planning
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You can create a second income during the
lockdown…and come out stronger
You can create a second income during the
lockdown…and come out stronger
Millions of people face a bleak future post-Coronavirus
lockdown, as businesses disappear and the job furlough scheme eventually comes
to an end. However, life doesn’t have to end because of lockdown! You can join
thousands of ordinary people who have increased their income and added
streams of new income during this period.
lockdown, as businesses disappear and the job furlough scheme eventually comes
to an end. However, life doesn’t have to end because of lockdown! You can join
thousands of ordinary people who have increased their income and added
streams of new income during this period.
Are you ready to adapt to the new economic model?
As lockdown restrictions around the world are being eased,
the economic model has subtly changed forever. How will you adapt to this new
way of working and running a business, what obstacles and opportunities lies
ahead? Will you be a participant or spectator in this revolution?
the economic model has subtly changed forever. How will you adapt to this new
way of working and running a business, what obstacles and opportunities lies
ahead? Will you be a participant or spectator in this revolution?
By Charles Kelly, Wealth Mentor, Property Investor, Author
of Yes, Money Can Buy You Happiness and creator of Money Tips Podcast.
of Yes, Money Can Buy You Happiness and creator of Money Tips Podcast.
There are more examples and practical
steps to getting rich and being happy in my book, Yes, money can buy happiness, I cover the 3
R’s of Money Management, the Money B.E.L.I.E.F System and much more. Check it
out on Amazon http://bit.ly/2MoneyBook.
steps to getting rich and being happy in my book, Yes, money can buy happiness, I cover the 3
R’s of Money Management, the Money B.E.L.I.E.F System and much more. Check it
out on Amazon http://bit.ly/2MoneyBook.
If you’d like further information on wealth mentoring and
coaching, how to survive the crisis and even quit the rat race, email me at Charles@CharlesKelly.net
or send me a message through Facebook or my Money Tips Daily community. See
more articles at www.moneytipsdaily.com
coaching, how to survive the crisis and even quit the rat race, email me at Charles@CharlesKelly.net
or send me a message through Facebook or my Money Tips Daily community. See
more articles at www.moneytipsdaily.com
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