A combination of 2020’s high death rate and delays to probate could result in a spike in charitable bequests next year, according to Legacy Foresight’s Legacy Market Outlook 2020-2025 report.
This year, deaths in the UK are potentially at their highest for 100 years, possibly reaching between 687,000 and 695,000. In addition, ongoing administrative delays at probate are impacting bequests received by charities.
Members of the Legacy Monitor benchmarking consortium received around 20% fewer bequests than expected between January and September 2020. Cash legacy income was also 8% lower for May-September compared to 2019, while across the sector as a whole this is expected to be 11% lower by the end of 2020 compared to 2019’s figures.
However, as income also starts to flow from the expected increases in bequest volumes next year, charitable bequests across the sector in 2021 could be 37% and 50% higher than in 2020, and cash legacy income is also expected to recover. As a result, legacy incomes are predicted to increase by around 22% in 2021.
Although volume of bequests is expected to rise, Legacy Foresight’s analysis suggests that average residual bequest values will fall through 2021 and 2022, largely due to the impact of the economic downturn on house prices.
According to Legacy Foresight, the five-year outlook remains positive. It predicts:
- Legacy incomes will grow beyond their pre-crisis levels, reaching between £3.6bn and £4bn by 2025, an increase of 6%-16% from levels of income seen in 2019, with a central forecast of around 11% growth
- Around 10% more charitable bequests over the five years 2020-2025 compared to the previous five years 2014-2019
Jon Franklin, economist at Legacy Foresight, commented:
“The single biggest source of uncertainty for legacy incomes at the moment is not so much the impact of the pandemic but the impact of administrative delays at probate. If the backlog at probate is cleared, then we could see the demands on legacy administration teams peak at record levels next year, and charities need to think about how they can respond to that at relatively short notice. Further ahead, the outlook remains positive, with growth in both income and bequests expected over the coming five years.”
Rob Cope, Director of Remember A Charity, added:
“If there was ever a year when charities were in need of a record number of charitable bequests, then surely 2021 will be it. This forecast for a boost in legacy growth over the next few years could not be more welcome or more needed.
“Legacy growth will largely be driven by the volume of gifts rather than their values over the coming decade, particularly as the number of charities named in Wills continued to grow. This means that legacy fundraising will be more important than ever for charities as they strive to increase their legacy income and strengthen their resilience for the years ahead.”
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