The Duke and Duchess of Cambridge, better known as Prince William and Kate Middleton, are expecting their first child in July.

Is it a boy? A girl? Twins? The jury is still out, but on one point there’s considerable certainty: Thanks to some ancient history, the future monarch will eventually inherit a sizable fortune and become the custodian of extraordinarily valuable state assets.

Queen Elizabeth II, William’s grandmother, has a personal fortune derived largely from the 46,000-acre Duchy of Lancaster, a collection of properties in the northwest of England. King Edward III re-created the duchy for his son, Prince John of Gaunt, after he married Blanche, the sole heiress of England’s wealthiest peer, Henry Grosmont, the first Duke of Lancaster, in 1359.

When the couple’s only surviving son became King Henry IV in 1399, he decreed that the Duchy of Lancaster would remain separate from all other crown lands, passing directly from monarchs to their heirs. The duchy is no pittance: It’s valued at about 348 million pounds ($550 million) in total and yields annual revenue of about 13 million pounds.

No Taxes

Not a bad inheritance for the royal child. Better yet, he or she won’t pay taxes on it. A 1993 agreement between the queen and Prime Minister John Major exempted assets inherited by a monarch from a former sovereign or consort from the 40 percent inheritance tax on estates valued at more than 250,000 pounds (a measure undertaken to prevent the erosion of the royal family’s financial resources).

That means the future monarch might also receive -- tax-free -- two royal estates that the current queen inherited directly from her father, King George VI: Balmoral in Scotland, where the queen spends part of the summer, and Sandringham in Norfolk, where the royal family celebrates Christmas. In contrast to the Duchy of Lancaster, where the principal must be maintained for future sovereigns, the disposal of Balmoral and Sandringham is at the discretion of the monarch. The queen, in other words, could hand them over to the nation rather than keep them in the royal family, much as King Edward VII did with Osborne House -- now a museum -- on the Isle of Wight in 1901.

Still, the future monarch will have to work for some of the money he or she inherits: It will be his or her job to oversee a collection of state properties originally known as the crown estate or crown lands.

These were properties the monarchy had accumulated since the Norman Conquest of 1066. Under reforms introduced in the 18th century, the monarch would surrender these lands to the state but retain some control by serving as their custodian. In return, he or she received an annual payment known as the civil list. The funds from the civil list now cover staff salaries as well as the costs of entertaining more than 50,000 people a year at garden parties, receptions, and official state visits. As of 2012, civil-list income, grants-in-aid for royal travel expenses, and funds for the maintenance of the royal palaces have been combined into a single sovereign grant under the administration of the Treasury -- totaling about 31 million pounds. That’s plenty of money for garden parties.

Finally, the future heir will have use of the royal palaces: Buckingham Palace, St James’s Palace, Clarence House, Marlborough House Mews, the residential and office areas of Kensington Palace, Windsor Castle and the buildings in the home and Great Park at Windsor, and Hampton Court Mews and Paddocks. The heir may not transfer title to the historic collections within these palaces, including the royal art collection, as these belong to the nation rather than the monarch. These are assets, yes, but they can’t be sold to make up budget shortfalls.

With so much wealth attached to the position of the monarch, it may appear that younger children of the Duke and Duchess of Cambridge would have little to inherit. Fear not: Thanks to inheritances from William’s great-grandmother (Elizabeth Bowes-Lyon, the “Queen Mum”) as well as from his mother (Diana, Princess of Wales), the Duke of Cambridge has an additional 17 million pounds or so to provide for any children who arrive after his first-born.

Still, the baby due in July will get the lion’s share. And with great wealth comes royal responsibility.

(Carolyn Harris is a lecturer in history at the University of Toronto’s School of Continuing Studies and is a royal-history blogger at www.royalhistorian.com. The opinions expressed are her own.)

Read more from Echoes online.

To contact the writer of this post: Carolyn Harris at carolyn.suzanne.harris@gmail.com.

To contact the editor responsible for this post: Timothy Lavin at tlavin1@bloomberg.net.