Charitable bequests could reach at record levels in 2021, at around 35% higher than in 2020, according to Legacy Foresight.
There were 690,000 deaths in the UK in 2020, which is the highest level seen since the Spanish Flu epidemic and the conclusion of the First World War in 1918.
This spike in the number of deaths, combined with the delays still affecting estate administration processes, means that Legacy Foresight expects this peak in bequests.
However, this growth depends on the resolution of delays experienced during 2019 and 2020 in the estate administration process.
Therefore, there remains some short-term uncertainty due to both the ability of the whole estate management system to resolve ongoing administrative delays and broader external factors related to the pandemic and the wider economy.
Legacy Foresight's market forecasts incorporate the latest information for the vaccine rollout, the recent performance of the housing market and the latest evidence on delays across the estate management system.
Jon Franklin, economist at Legacy Foresight, said: “The prospects for the legacy market in 2021 are promising with an expectation of an increase in the numbers of gifts, recent house price growth driving up the value of these gifts and, ultimately, more legacy income.”
He added: “However, charities need to consider the significant risks to this growth posed by the ongoing delays throughout the estate administration process and consider how they will manage uncertainty over both the volume of legacy administration work they will need to deal with as well as the cash they receive.”
Positive five-year outlook
Average residual bequest values are likely to hold up due to the continued growth in house prices and there is potential for them to decline by around 1% in 2022 if the housing market does begin to decline as expected.
Legacy income fell by 11% in 2020, but is expected to recover in 2021 when Legacy Foresight expects a central growth estimate of 27%, as income starts to flow from the anticipated recovery in bequest volumes.
This growth will continue in 2022 with further growth expected at a rate of 7%.
It says the five-year outlook remains positive. Between 2021-2025 Legacy Foresight expects legacy income to be 18% to 24% higher than it was over the equivalent five-year period 2016-2020, reaching between £3.7bn and £3.9bn by 2025.
It also expects to see around 15% more charitable bequests over the five years compared to the previous five years.