(MONEY Magazine) – NOW IT can be told: The storybook marriage of the century is almost certain to end in divorce this year.

So says the pack of seasoned pundits and royal watchers whose blow-by-blow accounts of the woes of Diana, Princess of Wales, and her estranged husband Prince Charles have turned into one of the great soap operas of our time.

No doubt both the reserved 46-year-old heir to the British throne and his formerly giggly 33-year-old wife will be relieved to put asunder their unlucky 13-year union.

But sadly for Diana, mother of heir Wills, 12, and spare Harry, 10, shedding matrimonial shackles also means losing a host of princely perks. She'll have to say ta-ta to the lavish 412-foot royal yacht Britannia with its crew of 240, the 14-car royal train and the Queen's Flight of three British aerospace jets and two helicopters (that cost British taxpayers about $48 million a year). Toodles as well to her spacious suite in Kensington Palace, the royals' sprawling red-brick compound at the edge of London's 615-acre Hyde Park. And a particularly heartfelt adieu to Highgrove, the Prince of Wales' neoclassical official residence complete with elaborate gardens, swimming pool and six-horse stables on a 1,100-acre estate in Gloucestershire, 100 miles west of London (current value: about $4.8 million). Not to mention Diana's chance to be Queen of England.

Never mind all that, Di. We need to talk, heart to heart, about your post-Charles future. Like many a sheltered wife facing divorce, you need to brace yourself for the coming challenges, including disentangling your identity from your husband's, finding fulfilling employment and learning--finally--how to supervise your finances. To secure a fair divorce settlement, you also need some frank advice, especially because British divorce law tends to favor wealthy husbands over dependent wives. Specifically, Money's royal-divorce experts, consulted by this writer during a five-day visit to London last fall, say you should:


Wait for Charles to take the first step toward divorce proceedings;

Hold out for a lump sum of about $20 million, accepting monthly support only as a last resort;

Stand firm against unreasonable demands, such as the return of jewelry you've been given; and, in what may be your stiffest challenge considering your indulgent spending habits,

Take personal control of the money you're sure to receive.


Although it's almost inconceivable that Diana, whose personal worth is estimated in the $9 million range, will ever want for money, stranger things have happened--like her marriage, for instance. So she, like many wealthy divorcing women on both sides of the Atlantic, must overcome a potentially crippling naiveta about matters monetary. "I see so many women going through divorces who are completely in the dark about their finances," says Victoria Collins, an Irvine, Calif. financial planner and co-author of Divorce and Money (Nolo, $21.95).

Alas, our princess appears to be one of them. She has been supported by men for most of her life. Before marrying in July 1981, she lived in a $150,000, three-bedroom flat near London's upper-crust Sloane Square bought by her rich father, Earl Spencer. Lacking a college degree, she earned only about $4 an hour as a teaching assistant at the Young England kindergarten. Since her wedding at the age of 20, she has depended on her husband, whose 1993 pretax income topped $6.5 million. Even today, after two years of official separation, Diana lives rent-free at Kensington Palace while Charles, whose in-town residence is two miles away at St. James's Palace, picks up virtually all of her expenses. In fact, until recently Diana probably hadn't touched money in years. "The royals never carry it," explains Ross Benson, a columnist for London's Daily Express. On most shopping jaunts, for example, an aide followed along to settle bills.


And those bills can be whoppers. First, there's couture fashion from designers such as Chanel, Tomasz Starzewski and Catherine Walker. In the first 10 years of marriage, Andrew Morton, author of Diana: Her New Life, estimates that Diana spent no less than $1.6 million on her wardrobe, despite the fact that many designers gave her generous discounts. In May 1994, a friend of Charles' told the London tabloids that Di was spending $4,800 a week on "grooming," such as hairstyling, manicures and pedicures. A large chunk of that money doubtless goes toward a round of New Age therapies that Diana has been indulging in "frenetically" since her separation, says Morton--from massage and hypnotism to acupuncture, aromatherapy and colonic irrigation (a bowel-cleansing treatment). Then there's her three-mornings-a-week workout at the Harbour Club, a high-security complex near the Thames with dozens of spanking-new Universal weight machines, a 25-meter navy-blue pool and a chic restaurant (initiation fee: $3,840, plus $1,728 a year), and her membership at the discreet Vanderbilt Racquet Club (initiation fee: $1,520, plus $1,272 a year and court fees of up to $35 an hour).

To her credit, Diana has been downplaying her spendthrift image since the 1992 separation. When she traveled to the Caribbean last January, for example, she flew on a regular British Airways flight instead of hopping aboard a royal plane. She also turned in a loaner $120,000 red Mercedes for a more modest Audi convertible that she drives herself. And last year, she even dismissed the taxpayer-paid detective assigned to guard her (though he's lately back on the job).

Indeed, Di doesn't lack for good help. Despite announcing her withdrawal from public life in December 1993, the princess is still served by a private secretary, a personal assistant, a press officer and a few additional secretaries. Salaries for that staff, as well as for her chef, butler, maids and other household help, are all paid by her estranged husband.


Where does the big-eared one get the cash? Look no further than a nifty royal perk called the Duchy of Cornwall (see the box on page 107), a hereditary estate that handed Charles a handsome $6.5 million in 1993, the first year in which he agreed to pay income tax, estimated at $1.6 million for the year. In the recent Charles-vetted bio, The Prince of Wales, author Jonathan Dimbleby claims that the prince's personal assets total a comparatively modest $3.2 million. But there's more, according to biographer Anthony Holden. He reports that Queen Elizabeth set up an $8 million trust fund for each of her children at their birth. Assuming that money grew at a reasonable 10% a year, Charles' fund figures to approach $640 million today.

And let's not forget the prince's prospective inheritance from the 68-year-old queen, the monarch-matriarch whom Fortune magazine ranked as the richest woman in the world in 1993. Her estimated net worth: $7.8 billion. Approximately $7 billion is in hereditary Crown possessions such as art, jewelry and palaces; the remaining $800 million or so constitute her personal assets, including an investment portfolio that money-and-monarchy expert Phillip Hall estimates at $650 million. Even though Elizabeth, like her son, agreed to begin paying income taxes in 1993, she will continue to be exempt from inheritance taxes on all personal assets she bequeaths to the next sovereign (yes, even a divorced Charles is legally entitled to ascend the throne). That windfall tax advantage will doubtless induce her to leave most of her personal wealth to Charles rather than to other family members.

Missing out on such riches will by no means reduce the princess to Cinderella, of course: She's a wealthy woman in her own right. When her father died in 1991, the bulk of his $141 million estate, largely museum-quality art, went to Diana's 30-year-old brother Charles. But Michael Nash, a senior law lecturer at Norwich City College who is at work on a book about royal divorce, says it's reasonable to assume that Diana and her two sisters got a portion too. Our estimate for Di's share: $4 million.

The princess also has jewels--$5 million worth, by some estimates. Her biggest scores came as wedding gifts (see the box opposite) and as not-so-petite bijoux from representatives of Middle Eastern countries. Taken together, her jewelry and inheritance may well amount to a tidy personal net worth of about $9 million.


Unfortunately, even a seven-figure asset base can't always buy love. On a British television documentary last June, Charles admitted committing adultery, most likely with his longtime flame Camilla Parker Bowles. A few months later, former British army officer James Hewitt, 36, alleged in the Anna Pasternak book Princess in Love that he and Diana were lovers from 1986 through 1991. And adding insult to all this supposed mutual injury, the Dimbleby account stated that Charles never loved Diana: His father Prince Philip bullied him into marrying the young woman. To deal with such pressures, Morton says the princess has begun seeing a psychotherapist twice a week (typical cost in London: $60 per 50-minute session) and taking the trendy mood-enhancing drug Prozac (cost for the typical patient under Britain's socialized medical plan: $7.60 per month).


Can the royals find a way to put this marriage back together again? Doubtful. We'll let the tabloids slug that one out. Meantime, we'll focus on helpful advice for the course we assume Di would prefer:

The sole grounds for divorce in England are "irretrievable breakdown" of the marriage. British law says two years' separation is evidence of such a failure, and that two-year marker passed for the Wales pair last Dec. 9. Once legal papers requesting divorce are filed with the divorce registry in London, a divorce can be finalized within a month or so.

Diana's lawyer Lord Mishcon told Money he has not yet discussed a divorce or a financial settlement with Charles' lawyer, Henry Boyd-Carpenter, and Boyd-Carpenter's office concurs. But not everyone believes that. "Sources tell me that exploratory talks have gone quite a way forward," reports Nash.

What is clear is that Diana will need to fight hard for a substantial settlement. That's because in Britain, the court's decision about the size of the award to the less wealthy spouse is traditionally based on the concept of that individual's "reasonable needs." (For a snapshot on U.S. law, see the box opposite.) Explains Raymond Tooth, a divorce attorney with Sears Tooth in London: "If the court decides that a wife's reasonable needs are for £100,000 a year, whether the husband has £50 million or £500 million doesn't matter." To figure out precisely what those reasonable needs are, the court is supposed to consider the couple's standard of living before the marriage broke down. Yet in practice, says Tooth, even wives of British megamillionaires rarely win lump-sum awards worth more than £5 million ($8 million).


Even so, savvy royal watchers say Diana is less worried about negotiating a big financial settlement than she is in winning unlimited contact with sensitive William and outgoing Harry, both of whom attend boarding school at Ludgrove in Berkshire, where annual tuition, room and board costs $14,000 per child. The kids currently split their holiday time equally between her and Charles. "It's her greatest concern that her children will be taken away from her," says Morton. Diana has personal reasons for that fear: Her divorcing mother lost custody of her and her three siblings to their father when she was just seven years old because the courts frowned on the fact that her mother had left Earl Spencer for another man. And despite wagging tongues that have variously linked Diana to everyone from London antique dealer Oliver Hoare to New York City financier Teddy Forstmann, that's a mistake this lovelorn princess is unlikely to make.



Wait for Charles to initiate divorce proceedings. As British Prime Minister John Major pointed out in 1992, should the queen die while Charles and Diana are still legally married, Diana may claim the throne as queen. Further, if Charles is king when the divorce takes place, he will have far greater wealth at his disposal than he does now, which may boost Di's chances for a sizable financial settlement. Charles' fear of such scenarios--which she might do well to hint at--gives her negotiating power.

Don't panic about the kids. In Britain, the courts get involved in custody decisions only if parents can't agree on a suitable arrangement. But legally, the sovereign has the right to control the education and upbringing of the heirs presumptive. So technically, the queen could override Diana's parental rights and specify how and where Princes William and Harry live. But obviously, to avoid widespread public censure, the queen is unlikely to exercise that power. As a practical matter, so long as Diana doesn't move to another country, the couple will probably continue to share custody.

Stand firm against unreasonable demands. Charles will likely seek significant concessions from Diana in return for generous financial support. The most predictable demand: She agrees not to do anything that might embarrass the royal family in the future, such as publish her memoirs. Nash even foresees financial penalties if she marries again before her kids are both 18, lest her future husband be deemed unfit by the Crown. By then Diana would be 41--leaving her little time to produce the two daughters she's said to want. Diana's bargaining chip is her power to create bad publicity for the royals.

Hang on to the jewels. Diana's in-laws may argue that many of her jewelry gifts are heirlooms and should be returned--or that the jewels she was given by foreign heads of state are state property. Not necessarily. "Even if Diana got those gifts on an official state visit, it's possible for her to argue that they're her private property," says Phillip Hall, author of the groundbreaking 1992 book Royal Fortune. A compelling reason to keep the jewelry: Diana can sell the gems if she ever gets into a financial jam.

Hold out for a large lump sum. A clean-break settlement of $20 million or so rather than maintenance payments of about $800,000 a year, says divorce solicitor Raymond Tooth, will make Diana far more independent. Another reason to prefer the money up front: In Britain, as in the United States, alimony ceases upon the death of the payer or recipient, or the recipient's remarriage. To net the largest possible settlement, Diana should argue that she must maintain a standard of living appropriate to the mother of the heir to the British throne. There's one catch: Because most of Charles' money is tied up in trusts, the queen would likely have to contribute to make a sizable clean-break settlement possible.

Hire and manage the right financial advisers. Clearly, Diana will never have to trouble herself doping out a P/E ratio. But she must take charge of her finances and her money managers. "You can't delegate everything," says financial planner Jon Golding, chairman of London's Sterling Westminster Group. Flying solo, Diana needs to put herself on a budget and ensure that the investments from her anticipated lump sum will provide adequate income for the rest of her life--easily 50 or 60 more years. Golding advises her to keep about 18% of her investments in cash for easy access; 25% in bonds for income; 43% in stocks and stock funds for growth; 4% in precious metals as an inflation hedge; and the remaining 10% in a so-called enterprise investment trust, a British contrivance that would allow her to shelter the resulting income from taxes. Because Diana would be perched at Britain's top tax bracket of 40%, which kicks in at an annual taxable income of £23,700 ($37,920), she should take advantage of as many other tax-advantaged investments as possible.

Look to the future. Choosing some kind of work would give the divorced Diana a renewed sense of purpose, points out Linda Barbanel, a New York City psychotherapist. A good start: Diana's new role this year leading the British Red Cross' 125th anniversary fund drive. Other options: the lecture circuit; product endorsements (if sports celebrity Michael Jordan can snag an $18 million contract to push Gatorade, think how much Diana could command by flogging, say, Evian water); even a spot of writing (sister-in-law Fergie pulled down a reported $3 million for her children's books). Independent income, and the self-respect it brings, could come in handy in the event the ex-princess starts a new family. Now that would be a happy ending.