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Sunday, November 23, 1997 Published at 10:20 GMT


Handling a princely sum
image: [ John Major's role is as an honest broker for Princes William and Harry ]
John Major's role is as an honest broker for Princes William and Harry

The divorce settlement agreed last year for Diana, Princess of Wales, could be scrapped under the proposal being considered for the inheritance left to the two Princes.

An identical sum of money would then be paid into a trust fund held for Princes William and Harry.

Such an arrangement would have one, simple aim: avoiding 40% inheritance tax imposed on wills.

Diana received around 17million following her divorce. Taking interest into account, this could mean a tax bill of more than 8million.

The legal precedent for abolishing the divorce agreement can be found in the 1987 case of Barder versus Barder.

Then, a divorce settlement was halted by the court when the wife died only a month after it had been agreed.

The death of Princess Diana came after a similar amount of time had elapsed following her divorce settlement with the Prince of Wales so the same ruling might be invoked.

As the Prince Charles' solicitors propose re-paying the money directly to his children, the move could go unopposed.

It is the role of the former Prime Minister, John Major, to ensure the final agreement protects the Princes' interests.

He was brought in partly to avoid a potential conflict of interest as Diana's solicitor, Mishcon de Reya, is acting both for her estate and the Diana Memorial Fund.

The Princes have also appointed their own lawyers, Boodle Hatfield, to resolve the problems brought about by the will.

The case had been scheduled to go before the courts on Friday. This was halted at the last moment by Diana's estate's trustees. The main worry appeared to be that the public might view an attempt by the Royal Family to invoke the Barder principle as a grand tax dodge.

Mr Major, like the lawyers and trustees involved in the deciding how to proceed, insists he will make no public comment on his role.

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