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Is it true that he renounced his succession rights for himself and his descendants for marrying Princess Mafalda of Savoy -- obviously not because of any "unequal" birth (she being a daughter of King Vittorio Emanuele III of Italy) -- because of religion?
No, he did not. He became head of the entire House of Hesse. The family does not use the differencing name of ‘Cassel’.
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Who are the present-day heirs to the house, anyway? What exactly happened to the succession? It seems that this might count as another example of a marriage not dynastically approved, despite the unquestionable equality of the union.
It was a dynastic marriage. His grandson Donatus, Prince and Landgrave of Hesse, is the titular Grand Duke and Elector of Hesse and head of the entire house.