According to a new report, charitable bequests are set to remain a “resilient source of income” in spite of any recessionary squeeze on people’s budgets.
According to Legacy Foresight data included in the UK Wills, Probate & Trusts Market 2022: Market Trends Report released by IRN Legal Research, legacy income is forecast to reach a record £4bn by the end of 2022, representing a year-on-year increase of 14% on 2021.
Legacy Foresight do, however, expect the economic environment to dampen growth in the short term, with overall legacy income to remain static at around £4bn over 2023 and 2024 before returning to growth and reaching a value of £4.4bn by 2027:
“The turbulence of the last twelve months with the war in Ukraine, cost of living crisis and rising inflation has caused many charities to be concerned about the future of income.
Although in the near term we are more cautious about the outlook for legacy income over the next five years, we expect negative impacts to be short lived, and to see a return to growth after 2024, driven by rising bequest numbers and a steadying of the housing market.”
Any short-term fall in incomes is likely to be driven in principle by a downturn in the housing market, with Legacy Foresight estimating a fall in average bequest values of around 3% over the next two years.
After 2024 however, the housing market is expected to return to growth with average values expected to follow.
As well as this, Legacy Foresight also expects the short-term impact of the housing market downturn to be offset to a degree by an increase in deaths, with recent death projections from the Office for National Statistics forecasting that there will be almost 700,000 annual deaths by 2030, compared to 640,000 in 2022.
Due to the ageing UK baby boomer generation, it is said annual death rates will even exceed those experienced during the pandemic years. This will have a knock-on effect on bequest numbers, which are expected to be 11% higher in the period 2023-2027 than in the previous five years.
Looking further ahead, IRN say the future for the legacy market is still positive, with the size, wealth, and lifestyles of the baby boomer generation meaning incomes are expected to double in real terms by 2050.