Was this act of omission deliberate or just sloppy? The simplicity of the will suggests that little planning went into its drafting. One legal source close to the estate was quoted as saying: "Basically not a lot of thought went into it. It has all the hallmarks of someone saying 'You'd better make a will'. It is just thoroughly unimaginative and pretty standard. But then to be fair nobody thought she would die.”5
Indeed, Diana was brimming with life when she wrote the will in June 1993. She was about to embark on a solo tour abroad to Zimbabwe, having achieved what most people interpreted as a victory over her husband in the separation agreement. Quite apart from granting her a private office and staff and letting her keep her title Princess of Wales, it gave her the all-important access she wanted to her children - and "the boys” must have been uppermost in her mind when she hastily drafted a new will. Money matters would not have been a top priority since she owned no property and her Spencer jewellery belonged to her brother. At the time, her personal wealth was estimated at little more than £1m.
The divorce settlement in July 1996 changed all that. Thanks to the hard-bargaining of her lawyer Anthony Julius from the commercially-orientated firm Mischon de Reya and her own determination to face down the palace having seen how Sarah Ferguson had been bested by the Windsors in her divorce from Prince Andrew, she came away with a remarkably generous settlement. She would receive a lump sum of £15m and £400,000 annually for her office. She also got to keep her rent-free residence at Kensington Palace and Prince Charles agreed to pay the children's expenses and school fees. Her one reverse was to lose her HRH style, being known as Diana, Princess of Wales, but she would still be regarded as a member of the royal family and would have use of all the royal jewellery which eventually would be passed on to the wives of her sons.
In hindsight the time of the divorce is when she should have redrafted her will. Her personal fortune had suddenly skyrocketed from £1m to something approaching £20m and in such changed circumstances it would have been advisable to write into her will an interest in possession trust for her children. But amidst the turmoil of divorce inheritance tax planning must have been the last thing on her mind. Using the loss of her HRH status as an excuse, she announced without warning that she would prune her charity commitments from around one hundred to just six. Her media advisor Jane Atkinson promptly resigned. Diana also fell out with her close friends Lord and Lady Palumbo, Elton John and Sarah Ferguson. The one financial decision she did make for her children was to follow Prince William's advice and auction her old dresses for charity. The star-studded New York sale in June fetched $3,258,750 - with one buyer paying $222,500 for the gown she wore when she danced with John Travolta at the White House.
When it later emerged that her sons would lose £8.5m of their inheritance to the taxman, Diana’s inaction drew much criticism. Tax lawyers were amazed that she had not put the bulk of the settlement into a trust for the children. Such an arrangement was still liable to inheritance tax if she died within seven years, but this could have been mitigated by insurance policies against the estate paying tax within that period. It was also pointed out that the tax liability could be significantly reduced if Prince Charles appealed to the court to vary the terms of the divorce settlement. Available to him was the legal loophole established in the 1987 case of Barder v Barder in which a wife committed suicide shortly after her divorce settlement. The House of Lords ruled that in certain circumstances - and providing third parties such as the children were not adversely affected - the order regarding the divorce settlement could be overturned. It was reported that Charles's lawyers did for a time consider such a legal move involving a sum equal to the settlement money being put in a trust for the two princes but ultimately rejected it on the grounds that it might be portrayed in the press as a "raid on his dead wife's estate."6
In the end the will was changed - not by Charles or Diana but John Major in his capacity as special guardian. In November 1997 he had been appointed guardian for the financial interests of the two princes on the suggestion of the Prince of Wales who felt that they needed separate representation. The former prime minister was trusted by both sides. While at 10 Downing Street he had acted as an honest broker in the divorce negotiations between the Waleses and Diana later wrote him several personal letters to thank him for his advice. Again in his role as middleman, he helped organise a joint application by the lawyers representing the princes and the estate to vary the will and on 17 December 1997 the High Court granted the order. It ran to thirty-four pages – twenty-eight longer than the original will.
The main variation was to make it easier for the princes to gain access to their mother's money (or, as Martyn Gowar more elegantly put it, to ensure that they "were comprehensively accommodated"). Under the original will, they would have to wait until their 25th birthday before they could dip into the trust fund, but the new arrangement allowed them to use some of the interest from the capital. It also established a separate discretionary fund with a sum of £100,000, some of which could be distributed to them at the discretion of the trustees. A portion of the money could also go to charity, so answering the criticism that Diana had left nothing for good causes.
Paul Burrell who had also been forgotten in the original will was given under the new arrangement £50,000 free of inheritance tax. As butler, personal assistant and confidant to Diana for almost a decade, he was devastated by her death and on the eve of her funeral had insisted on maintaining an all-night vigil by her coffin in the hallway in Kensington Palace. In his memoirs he refers to Lady Sarah McCorquodale and Frances Shand Kydd as stating he was given the bequest as recognition of his duty and loyalty towards the princess.7 Lady Sarah later confirmed that he had worked hard on Diana's estate and that her mother wanted to reward him for his years of service. But Frances Shand Kydd also told her biographers that he had begun to get ideas above his station and that his position might possibly have gone to his head.8
The variation also appointed a third executor to join Diana’s sister and mother - Richard Chartres, Bishop of London. He was initially approached by Lady Sarah to take up the position. His direct connection with the royal family derived from his service since 1996 as Dean of Her Majesty's Chapels Royal. On the eve of Diana's funeral, he was with Paul Burrell sitting in prayer before her coffin. To underline his establishment credentials he was also a privy councillor and a member of the House of Lords. One reason for his involvement was the potential conflict of interest of the other two executors who were acting both for Diana’s estate and the memorial fund set up in her name. They were competing for the right to use Diana's name in souvenirs, gifts and other products. "The relations between the estate and the memorial fund were very complex," the bishop later explained, "[and] it was thought useful and desirable that there should be an additional executor uninvolved with the memorial fund."9
A large part of the amendments to the will dealt with intellectual property, a matter that had been completely ignored in the original will. Indeed Gowar has suggested this was the prime reason behind the redrafting. Clause upon clause meticulously defined her moral rights, literary rights, performers' rights, copyright, audio and photographic rights and any rights linked to any sign or mark arising from her name. After her death it became apparent that the use of her name or image could be worth tens of millions of pounds. These rights were placed into the trust fund along with her wardrobe and wearing apparel. In hindsight, the estate was well advised to attempt to clarify her intellectual property since in 2004 Diana’s image rights would be the subject of a costly legal wrangle when the Memorial Fund unsuccessfully tried to sue the Franklin Mint for exploiting her identity on its merchandise – an experience that might well have influenced the later decision of her two sons to set up companies to protect their own image rights.
The most controversial revision of her will, however, concerned the seemingly innocuous area of chattels. Clause four of the original will stated simply that Diana gave all her chattel
s to her executors who should distribute them according to any written memorandum or notes of wishes that she might leave behind. The revised arrangement deleted this clause and replaced it with more carefully worded instructions. The executors were given absolute discretion to select chattels from a list of items described in Part 1 of Appendix 1 and then distribute them to a list of godchildren named in Part 2 of Appendix 1.
The list of items in Part 1 was identified according to reference to Christie's Catalogue. The catalogue in question had in part been drawn up by Meredith Etherington-Smith, a marketing director at Christie’s, who had after Diana's death been brought in to help Paul Burrell and the executors in the laborious task of listing and valuing all personal possessions before probate. She had already gained an intimate knowledge of the princess's property having spent many months in 1996-7 cataloguing her dresses for the Christie’s auction in New York.10 The sixteen catalogued items in the new will ranged from the infantile - a pen tray, china rabbit and a model harp - to the adult - a coffee service, carriage clock and a watercolour painting.
The list of seventeen godchildren in Part 2 was also a mixed bunch - and one that offered a fascinating insight into Diana's wide circle of friends. On the one hand, there were the titled aristocracy or royalty - such as HRH Prince Phillips of the Hellenes, the three-year-old son of the ex-King Constantine of Greece, Lady Edwina Grosvenor, the six-year-old daughter of the Duke of Westminster, and Lord Downpatrick, the nine-year-old son of the Earl of St Andrews and grandson of the Duke of Kent.
On the other hand, there were the offspring of some of her untitled friends from her teenage days. They included Leonora Lonsdale, aged eleven, who was the daughter of Laura Lonsdale (née Greig) who was at West Heath finishing school with her and whose twin brother Geordie Greig was the journalist who went on to be editor of the Tatler and the Mail on Sunday. Also a contemporary at West Heath and a flat mate during her pre-marriage Sloane period was perhaps her closest friend, Carolyn Bartholomew (née Pride). When she had a son, Jack, Diana agreed to be a godmother attending his christening and remembering him in her will. The ten-year-old Camilla Straker was the daughter of another former flatmate, Sophie Kimball, who married the old Etonian farmer Reuben Straker.
There were two other intriguing names. Master George Frost, who was the ten-year-old son of Sir David Frost and Lady Carina, the daughter of the Duke of Norfolk. Frost had been one of many television illuminati to whom she turned for media advice. Last on the list was Miss Dominica Lawson, the daughter of Dominic Lawson, the former editor of the Sunday Telegraph and son of the ex-Chancellor of the Exchequer, and Rosa, the daughter of Viscount Monckton and granddaughter of Sir Walter Monckton who had renegotiated George V’s estate for Edward VIII. Rosa Monckton was almost a sister to Diana who allowed her to bury her stillborn daughter, Natalia, in the private gardens of Kensington Palace. Her other daughter Dominica who was named on the list suffered from Down’s syndrome.
Lady Sarah duly carried out her duties as executor by distributing the chattels. She drove round the country in an estate car visiting the parents of the godchildren. Among the items she handed out were an incomplete tea service, a decanter inscribed to the princess from a Women's Institute and a framed print that had been a corporate gift from Argos, the high street catalogue store.
It later emerged that Diana had left a letter of wishes that in one significant respect differed from the way the chattels were actually distributed. Dated 2 June 1993 - one day after she signed the original will - the document stated that she would like her executors to divide her personal chattels at their discretion between her sons and godchildren. The division was to be three quarters in value to her sons and one quarter between her godchildren. But she wanted her executors to allocate all her jewellery to the share to be held by her sons, so that their wives, in due course, might have it or use it. She left the exact division of the jewellery to the discretion of the executors, although she selected sixteen special items for her seventeen godchildren.
It was thus the clearly stated wish of Diana that her godchildren should get a significant share of the value of the chattels and not just a few individual items specified on the list. The value for each godchild was later estimated at £100,000-£150,000.
This new information came to light in October 2002 when it was read out in open court at the Old Bailey by the barrister representing Paul Burrell. Diana's former butler had been charged with stealing three hundred and fifteen items belonging to Diana's estate - as well as to Prince Charles and Prince William - and the strategy of the defence counsel, Lord Carlile, the former Liberal MP, was reportedly to undermine the credibility of the evidence given by the Spencer family.11 Lady Sarah was one of the early witnesses to take the stand for the prosecution and explained to William Boyse, the barrister acting for the Crown, that in the light of their age, it was better to give the godchildren a personal possession rather than a lump sum. In cross examination, Lord Carlile then asked her: “If the letter of wishes had been carried out the godchildren would have received much more than the ‘memento’ of Diana they got?”
Lady Sarah replied: "I think it was more than a memento, the things that were chosen." She went on to elaborate that she thought it made a difference that Diana wrote the letter of wishes three years before her divorce settlement: "Bearing in mind the age of the children which was very young that they would prefer to treasure what you call a memento rather than a lump sum." Lord Carlile then suggested that not all of the godchildren came from affluent backgrounds, to which Lady Sarah responded: "There are not many paupers in there."12
There had earlier been more revelations when the Bishop of London took the stand. Lord Carlile asked the sole non-family executor when he first became aware of the letter of wishes.
"I can't recollect being aware of these precise terms until now," he replied.
"So October 23, 2002, is the first time you have seen this letter of wishes?"
"According to my best recollection."
Lord Carlile continued: "Was the existence of this side letter ever mentioned to you by Lady Sarah McCorquodale or the Hon Frances Shand Kydd or by any solicitor?"
"I cannot say that it was," the bishop answered.
"If you had been aware of a letter of wishes by Diana, Princess of Wales, which plainly this letter is, that's obviously something you, as independent executor, would have considered very seriously?"
"Very seriously, yes," he replied.13
The trial revelations came as a thunderbolt to the children's parents. After a few of them voiced their misgivings in anonymous briefings, Rosa Monckton wrote an angry article in The Daily Telegraph attacking the executors for "not acting in an honourable fashion" by ignoring the letter of wishes. All her disabled daughter, Dominica, received as a memento of her godmother was "a tatty brown box containing some pieces of Herend china wrapped in old newspaper, accompanied by a curt demand for a receipt." With a final twist of the knife, she added: "Hijacking Diana's memory is one thing, her chattels quite another and both the executors, and Burrell in his more naive way, are guilty of this.”14
The Tatler, the society magazine edited by Geordie Greig, poured further oil on to the flames with an investigation headlined "Betrayed: Diana's godchildren and their missing inheritance."15 It spoke to several parents who felt that the last wishes of Diana had not been fulfilled and it claimed that even though the parents were not all interested in the money, each godchild might have received as much as six figures (perhaps even as high as £320,000). Patrick Jephson, the erstwhile executor, joined the clamour by expressing his amazement that the bishop knew nothing about the letter of wishes and stating in no uncertain terms that "I would not have hesitated to carry out her wishes in this matter, and I don't hesitate now to ask why they have not been followed."16
In fairness to the executors, the cited figure of £320,000 appeared to be based on a misreading of inheritance law. Presumably, the sum is derived by dividing one quarter of the tot
al estate (£5.25m out of £21.5m) by seventeen (the number of godchildren). Legally, “chattels” only refers to movable possessions and not fixed assets nor cash and investments. So instead if you take the total for chattels alone (which would be at most £6.5m on the basis that the rest of the estate is taken up with the lump divorce settlement sum of £15m) and divide that by seventeen - each godchild might get a little less than £100,000. That is still a considerable sum, but Lady Sarah was correct - if a little undiplomatic - in stating that there were few paupers among the parents of the godchildren. One was on the Sunday Times Rich List.
From a legal point of view, the letter of wishes was not binding. Morally, the executors might have felt obliged to fulfil her wishes but not legally. Therefore, they were perfectly within their rights to go to the High Court to have it legally set aside as part of a wider redrafting of the original will. In defence of the Spencer family, Frances Shand Kydd’s biographers have pointed out that by the time the executors made the changes considerably more money was at stake.17 When Diana signed the letter of wishes in June 1993 her estate was worth little more than £1m but at the time of her death - following the generous divorce settlement - it had risen to over £20m. In the light of these changed circumstances, there was a case for altering the distribution of chattels.
But Frances's bona fides as executor were compromised by two other revelations from the trial. Under further cross examination from Lord Carlile, she was forced to admit that she had not even spoken to Diana in the last four months of her life. She explained this as "normal family behaviour" - part of the ebb and flow a loving mother-daughter relationship.18 But Burrell claims that he overheard a telephone conversation where she strongly criticised her daughter's choice of male friends which ended with Diana in tears vowing never to speak to her mother again. Apparently, letters of apology to Diana were returned unopened, marked “Return to Sender.”19
Royal Legacy: How the royal family have made, spent and passed on their wealth Page 19
