Legacy Foresight has released its Legacy Market Outlook 2020-2025 report today. The report shares their latest view of prospects for the UK legacy market, with three scenarios projecting out to 2025.
Due to the rapid changes in the legacy environment over the past year, Legacy Foresight is now updating its market forecasts whenever the situation changes significantly or when meaningful new information comes to light.
Key findings
Charitable bequests are expected to spike significantly in 2021
• The total number of deaths in the UK could reach between 687,000 and 695,000 in 2020 – this would be the highest level for more than 100 years
• Administrative delays at probate are ongoing, which in turn is impacting bequests received by charities; Charities in the Legacy Monitor benchmarking consortium received around 20% fewer bequests than expected between January and September 2020
• 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% and 50% higher than in 2020
Average residual bequest values are set to fall through 2021 and 2022
• Tighter restrictions intended to control the number of Covid-19 cases are expected to worsen the economic crisis and slow the recovery. This is anticipated to result in falls in UK house prices, with the central scenario anticipating a decline of around 6% in 2021 and a further 3% in 2022
• This downturn in house prices suggests that average residual bequest values could be between 1% and 10% lower in 2022 compared to the levels seen in 2019, with a central estimate of around a 6% decline
Cash legacy income will recover from 2021
• Cash income from legacies is being significantly affected by the ongoing administrative delays at probate. Across the Legacy Monitor Consortium members income was 8% lower between January and September 2020 compared to the same period in 2019
• Legacy Foresight estimate that by the end of 2020 cash legacy income across the sector as a whole will be around 11% lower in 2020 than it was in 2019
• However, legacy incomes are predicted to bounce back in 2021, increasing by around 22% as income starts to flow from the expected increases in bequest volumes
The 5-year outlook remains positive
• 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
• Likewise, Legacy Foresight expect to see 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, says:
“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 continues: “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, says:
“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.
He continues: “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.”
Matthew Lagden, CEO at the Institute of Legacy Management, says:
“Delays at probate have caused issues for many of our charity members when accounting for legacy income, which has made for a difficult year on top of other issues that have of course affected us all. However, we are optimistic that the situation with probate will improve over the coming months, and charities will be able to start to plan more confidently moving forward.
He continues: “We are heartened to see that Legacy Foresight’s predictions for the coming years are positive, with an increase in charity bequests expected. We know how important legacy income is to charities, and this expected increase in legacy income will enable them to continue all the fantastic work they do for causes around the UK.”
The Legacy Market Outlook 2020-2025 report is available at www.legacyforesight.co.uk.
