Coronavirus Causing 9% Drop In Legacy Income
Legacy income could fall by up to 9 per cent in 2020.
Legacy Foresight has considered forecasts from Oxford Economics and research from Imperial College London, who have estimated that between 20,000 and 40,000 lives will be lost because of the coronavirus, to predict how charities could be affected.
The research suggests 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.
However, in the main, the predicted legacy losses in 2020 are being attributed to administrative delays caused by disruptions to Wills and death notification services because of remote working restrictions making the dissemination of information a lot slower.
Similarly, processing claims may also face delays until restrictions are lifted and people are free to work in an office environment.
Legacy Foresight anticipates a ‘rapid’ increase in bequests from 2021 as delays unwind and administrative capabilities resume previous levels of efficiency.
Furthermore, over the next five years, legacy income is still set to rise between 14 and 19 per cent from £3.2 billion to £3.8 billion by 2024.
However, the Covid-19 outbreak is expected to have a longer term impact with Legacy Foresight’s 5 year forecast in February now expected to have reduced by between 1.6 and 4.5 per cent.
Jon Franklin, economist at Legacy Foresight, commented:
“While there is a high degree of uncertainty related to any projection for how the current situation in the UK could evolve over the coming months, these forecasts set out to support charities in assessing what this could mean for their legacy incomes.
“The scenarios outline a plausible range of outcomes but, on balance, we believe that outcomes towards the lower end of the income range are most likely.
“We will monitor developments relating to COVID-19, the economy and estate administration processes in particular over the coming weeks.”