‘Significant spike’ expected in charity legacy income next year

Charity

The number of charitable gifts in wills could be as much as 50 per cent higher next year than in 2020 because of a record-breaking death rate and a backlog of existing bequests, experts have predicted.

A new paper from the legacy consortium Legacy Foresight said the total number of deaths in the UK could reach between 687,000 and 695,000 in 2020 – the highest level for more than 100 years.

It said that despite this, the number of bequests received by charities in its Legacy Monitor benchmarking consortium, which represents about half of the UK charity legacy market, was about 20 per cent lower than expected in the first nine months of the year because of ongoing administrative delays at probate.

“The spike in the number of deaths, combined with the probate delays, mean that charitable bequests are likely to peak at record levels in 2021 between 37 per cent and 50 per cent higher than in 2020,” Legacy Foresight said.

Cash income from legacies was being “significantly a ffected by the ongoing administrative delays at probate”, the company said.

It said that among its members, legacy income was eight per cent lower during the first nine months of 2020 compared with the same period a year earlier.

Legacy Foresight’s outlook to 2025 anticipates that average residual bequest values will drop in 2021 and 2022, because of an expected fall in house prices.

“This downturn in house prices suggests that average residual bequest values could be between one per cent and 10 per cent lower in 2022 compared with levels seen in 2019, with a central estimate of around a six per cent decline,” it said.

Jon Franklin, economist at Legacy Foresight, said: “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.”

He said the longer-term outlook for charitable legacies remained positive, with growth in both income and bequests expected over the coming five years.

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