Charities’ legacy income is expected to make a quick recovery in 2021 after declining this year, a legacy consortium has said.
Legacy Foresight’s latest market predictions forecast an increase in legacy income by between 18% and 23% in 2021, as legacies start recovering from both the pandemic and administrative delays at the probate service, which slowed charities’ legacy income in 2019 and 2020.
Legacy Foresight said it now expects legacy income to be down by 11% overall in 2020.
While a significant slump, this is less than the worst-case-scenario projections released by the consortium in June, when Legacy Foresight said legacy income could decrease by up to a quarter in 2020.
Record bequests in 2021
The recovery in 2021 will be fuelled by a record number of bequests, expected to increase by between 37% and 50% on 2020 levels. This is a result of both an increase in the number of deaths because of the pandemic and expected administrative improvements at the probate service.
Last month, the probate service outlined its plans for clearing a backlog of about 29,000 cases awaiting probate. Probate needs to be granted before assets in a will can be sold or transferred to beneficiaries, including charities.
While the increased number of bequests is likely to drive income growth, Legacy Foresight expects a drop in the average value of bequests in 2021 and 2022.
Average residual bequest values could be down by between 1% and 10% 2022 compared to 2019, mainly because house prices are likely to decrease as a result of the economic crisis.
Legacy income is still expected to grow in the long-term, reaching £3.6bn-£4bn by 2025. This is a growth of about 11% on 2019.
2021 boost ‘could not be more welcome’
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.”
Rob Cope, director of Remember A Charity, said: “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.”