New forecasts have indicated that legacy incomes are set to decline more significantly this year than originally predicted.
In 2020, charities should prepare for legacy income to fall by between 8 per cent and 27 per cent with the average value of residual bequests also declining by 4 per cent this year.
The report has also suggested that social distancing measures and the increased number of deaths in 2020 could result in 10 per cent of bequests that should be notified in 2020 experiencing delays because of administrative challenges.
Delays in the home buying and selling process and potential social distancing requirements following lockdown restrictions being lifted could also result in up to a quarter of residual cash income being deferred until next year as property pipelines and sales experience delays.
Whilst legacy income over the next five years is set to grow from £3.2 billion last year to £3.8 billion by 2024, legacy incomes will be between 2 per cent and 5 per cent lower that estimates made before Covid-19 reached the UK.
The stark and sizeable shift in predictions between March and April highlights the impact Covid-19 is having on society and the economy.
Last month Legacy Foresight speculated that legacy income will decrease by between 3 and 9 per cent in 2020.
Whilst many anticipate the economy to bounce back quickly when restrictions are lifted, many legacy gifts are dictated by house prices. If the economy falters and house prices fall this will, in turn, have an impact on the amount a charity receives. Now that social distancing measures look set to extend beyond what many people anticipated in the early stages of the outbreak,a new model has been calculated.
Jon Franklin, Economist at Legacy Foresight, said:
“These forecasts show a more dramatic decline in legacy income, especially over the coming year. But despite the enormous uncertainty and significant negative impact in the short term, it’s important to recognise that legacy incomes are still expected to grow over the next five years.”
