Legacy income is forecast to reach a record £4bn by the end of 2022, an increase of 14% on 2021, a reflection of the buoyant housing market over the last two years and some recovery from ongoing issues in the probate administration process.

Legacy income expected to remain broadly static, but spending power will be reduced

The challenging economic environment will dampen this recent growth making the outlook for the legacy market more subdued than it has been in recent years. Legacy Foresight expects overall legacy income to remain static at around £4bn over 2023 and 2024 before returning to growth, reaching a value of £4.4bn by 2027.

However, with charities facing rapidly rising costs, the real value of these legacies will be eroded, potentially reducing the amount of services or charity activities they will be able to fund.

Legacy Foresight Economist Jon Franklin says: “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.”

Downward pressure exerted by falling house prices

The predicted downturn in the housing market is likely to have some short-term impact on average legacy gift values. It is now expected that the housing market will fall by 12%-13% over the next two years and Legacy Foresight estimates this will lead to a fall in average bequest values of around 3% in the same period. However, given the extremely volatile nature of the economic crisis, there is a risk that house prices could reduce further if the recession is deeper and more protracted than currently expected. After 2024, the housing market is expected to return to growth and average values are expected to follow.

But this is offset to some degree by an increase in deaths

Most recent death projections from the Office for National Statistics forecast that there will be almost 700,000 annual deaths by 2030, compared to 640,000 in 2022. This is due to the aging UK baby boomer generation and means we will see annual death rates exceeding that 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 they were in the previous five years.

Longer term, legacy income expected to double by 2050

Looking further ahead, the future for the legacy market is still positive – thanks to the size, wealth, and lifestyles of the baby boomer generation, incomes are expected to double in real terms by 2050.

Jon Franklin, says "These are understandably worrying times for all, the non-profit sector included. However, our forecast shows the remarkable resilience of the legacy sector, and how charities must continue to invest in legacy fundraising as one of the most reliable sources of income to carry out their vital work."

Commenting on the findings, Lucinda Frostick, Director of Remember A Charity, says: "In troubled times, the steady bedrock of legacy income is all the more crucial. This forecast highlights just how important it is that we continue to work together to keep legacies front-of-mind for supporters, and within charities too. The value of legacy donations may well take a hit in the short-term, but if the focus remains on stewarding supporter relationships and delivering sensitive, inspiring legacy fundraising, the outlook for longer-term growth is considerable and income from gifts in Wills really will be a lifeline for an increasing number of charities."