How the Duke of Westminster avoided billions in inheritance tax

Late Duke of Westminster's family inheritance tax

The heirs of the late Duke of Westminster will pay hardly any inheritance tax, despite the fact that he was worth a staggering £9.35 billion.

Gerald Grosvenor, who died from a heart attack aged 64 last summer, held the vast majority of his fortune in family trusts. These have now been passed on to his 26-year-old son Hugh, now the seventh Duke of Westminster, with virtually no tax paid.

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Officially, the late duke left a personal estate of only £616 million after debts and liabilities, and it's only this part of his fortune that will incur inheritance tax.

If it weren't for the trusts, the family could have been looking at a £3.4 billion bill. And to put this in context, the Treasury is expected to raise only £4.7 billion in total from death duties during this financial year.

The new duke - who is one of Prince George's godparents - is now the 68th wealthiest person in the world. His father owned 300 acres of some of London's most expensive districts, along with thousands of acres of farmland and other property worldwide.

The late duke left six-figure sums to other family members, along with £250,000 to be divided amongst his staff and £21.1 million to charities.

The news comes as social care minister Jackie Doyle-Price tells the general public that they shouldn't expect to be able to pass their home on to their children when they die.

In footage released by the Labour party, she hints that the government hasn't given up on its 'dementia tax' plan.

"The reality is that the taxpayer shouldn't necessarily be propping up people to keep their property and hand it on to their children when they're generating massive care needs," she told the Social Market Foundation fringe group.

"We've got to a stage where people feel that they are the custodian of an asset to give to their offspring... They shouldn't be seen as that."

John Christensen, director of the Tax Justice Network, tells the Daily Mail that the use of trusts to avoid inheritance tax should be investigated.

"Clearly this is not a case of someone being vulnerable and needing assets protected," he says. "It is quite simply a means of circumventing inheritance tax laws, and it is time for it to be challenged."

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The 10 richest people on the planet
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The 10 richest people on the planet
The richest man in the world is Bill Gates, with a fortune of $72.9 billion - up 16.2% in a year. His fortune is all the more impressive when you add in the fact that he has given away $28 billion - most of it to the Bill & Melinda Gates Foundation. Microsoft is now just a fifth of his fortune.
The Mexican telecoms magnate is still sitting on an incredible fortune of $65.5 billion - but this is actually $9.7 billion less than last December. He held the top spot for three years until it was regained by Gates, and now has interests ranging from mining to real estate - and even a stake in the New York Times.
The Spanish retail guru behind Zara is worth $61.9 billion - made from his 60% stake in the business. His company now also owns Massimo Dutti, Bershka and Pull and Bear.
The Investment genius known as the Sage of Omaha is now worth $58.2 billion. He still has no plans to retire at the age of 83. Last year he made $12.5 billion, and bought Heinz.
The man behind the Ikea brand is worth $50.3 billion. This finding differs dramatically from the net worth estimated by Forbes - who say that he demonstrated in 2011 that the majority of his economic stake had been transferred beyond his control decades ago and put his worth at $3.3 billion.
Their fortune (of $45.2 billion each) comes from the family business, Koch Industries (the second biggest company in the US), where Charles is CEO and David Executive Vice President. Both brothers invest 90% of everything they make into the business.

The technology firm Oracle has made its founder $41 billion. He is enjoying his money, investing in properties and his America's Cup team. He has also started donating enormous sums of money to his own medical foundation - which is working on reversing the effects of ageing.

The family behind the Wal-Mart brand has profited enormously, with Christy (daughter-in-law of founder Sam) worth $36.5 billion and Jim (son of the founder and pictured) worth $35.1 billion. Christy became the richest woman in the world after the death of her husband in a plane crash in 2005.
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