Bona Vacantia

Did you know that if you die without a will there's a chance your property will end up in the hands of Prince Charles?

In Britain everything must be owned by someone - that's the law. If no rightful owners of property can be traced then it is claimed by the Treasury. That is unless the property happens to be on land owned by the Duchy of Cornwall or the Duchy of Lancaster, in which case it goes to them.

It's called Bona Vacantia, but could more accurately be described as a 'nice little earner' not only for the Crown, but also for the Duchies of Lancaster and Cornwall - the profits of which are handed to the Queen and Prince Charles respectively.

The Latin term "Bona Vacantia" (literally 'vacant goods') means, in a UK legal context: "goods without an owner," or "empty property" and is used to describe what happens to, chiefly, three groups of assets:

1. Treasure trove found items.
2. the assets of those who die without a will or surviving relatives (intestacy)
3. the assets of companies that become bankrupt, or are wound up, for which ownership cannot be traced.

In English law, title to property must belong to, or be 'vested in', an identifiable person or body. No property or goods are ownerless. If legal ownership cannot be established by anyone else, it falls to the Crown to deal with the assets concerned. In most of England and Wales, the Treasury Solicitor handles such cases but in the case of the two Duchies, the administration is dealt with by a firm of solicitors, Farrer and Co.

Treasure Trove

Finders of gold and silver objects, and groups of coins found at the same site, which are over 300 years old, are legally obliged to report such items under the Treasure Act 1996. Prehistoric base-metal assemblages found after 1st January 2003 now also qualify as Treasure. Finds must be reported to a coroner for the district in which they are found within 14 days after the day of the discovery or the realisation that the find might be treasure. The coroner will direct the finder to deliver the find to a Reporting Centre within which experts will decide whether or not this is a 'find'. The current practice is that objects that are declared treasure are offered in the first instance by the Secretary of State to the national museum and that if the national museum does not wish to acquire the objects it offers them to other museums. There may be a reward.

Intestacy and Bankrupt Companies

These can be dealt with together as they both refer to the same principle - that of the death of a person or a company in circumstances where their assets cannot be vested in a surviving relative or owner respectively.

If you visit the Duchy of Cornwall website to look at the accounts for the year 2005-6 you may not fully appreciate the meaning of the small section headed "Bona Vacantia" and their extremely brief explanation of this term: "Under Bona Vacantia, the estate of a person who dies in Cornwall with no will or surviving relatives passes to the Duchy of Cornwall."

You may be aware that the property of those dying intestate goes to the Duchy, but this rule also applies to Treasure Trove and assets of companies for which ownership cannot be traced including some pension fund surpluses. What is not mentioned on the Duchy website is that, according to the Inland Revenue & Customs, Bona Vacantia also covers the property and rights that were beneficially owned by dissolved companies.

When a company is dissolved, its assets pass to the Crown, or the Duchies. If a company goes into liquidation and is wound up, its assets are first used to settle its liabilities as far as possible. Then the doors on the company close and it ceases to exist. If it is subsequently found to have owned assets that were not distributed prior to the dissolution, they cannot be returned to the now non-existent company. Prior to dissolution these assets could have been used to settle remaining debts. Instead it becomes Bona Vacantia and is passed to the Crown or the two Duchies.

Occupational pension schemes normally take a long time to wind up, usually longer than it takes to wind up the company itself. Once everyone who is entitled to a pension from the scheme has been provided with their benefits, if a surplus is found to exist, it also cannot be returned to a company that no longer exists. This surplus will then pass to the crown or one of the Duchies (without any tax being charged on it).

These occupational pension schemes are those paid into by employers and employees ultimately to benefit retired workers. For decades investment performance in these funds was very good and thousands of these schemes did indeed boast surpluses.

What is the money used for?

When one of the Duchies receives money from Bona Vacantia it does not have to pay tax on it.

Charles claims that the money he receives in this way is paid into his charitable Trust. However, you only have to look at the accounts to see that, before this happens, a very large slice is deducted as "expenses" (administration costs) for receiving and handling this money.

The Board of the Duchy of Cornwall has refused a request by the Treasury Select Committee to allow them to examine the audited accounts, claiming that the Duchy is a well-run private business. Strange then that this entity does not mind receiving money that have arisen from the businesses and estates of the ordinary tax-payer simply because it was classed as Bona Vacantia.

A more appropriate home for this money might be a compensation fund for those who have lost pension funds or savings because their employers have gone bust. Where it goes, there is no reason for it to go into the pockets of Charles or Elizabeth Windsor.