If a peer has more than one title, he may permit his eldest son to use one of the lesser titles. If that eldest son has an eldest son, and there are additional titles available, he too may be permitted to use a lesser title. For example, the Duke of Norfolk is also the Earl of Arundel and Lord Maltravers, and so his son may be styled Earl of Arundel, and the grandson styled Lord Maltravers. However, only the grandfather is a peer: the other two remain 'commoners' until they actually acquire a substantive title.
A peer's wife takes her courtesy title based on her husband's rank, unless she herself has a higher title. Thus a baron's wife is called "Lady", an earl's wife is called a "countess", a duke's wife a "duchess", etc. She does not, however, become a peer: these are 'styles', not substantive titles.
Another form of courtesy title, in the form of an honorific prefix, is granted to younger sons, and all daughters of peers. The rules differ for different ranks of peers: the children of a baron, for example, get the prefix "Hon.", the daughters of an earl are called "Lady", and so on.
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