Legacy Income Predicted to Reach £5billion in 2030 in the UK

When people pass away, a lot of them leave a will behind. Granted, there are some that don’t as they are under the misunderstanding that they are not necessary or are not important, but the fact is, you can achieve a great deal with your Will if you put it together and give it to beneficiaries who you think are deserving. The majority of people will ensure their assets pass down to close friends and family members; however, a large number of people also donate to different charities. This is where legacy income comes in.

What is Legacy Income?

When someone leaves a gift in their will, this is not only the last donation they will ever give, but it is also likely to be the most meaningful. It can help a number of different charities, and this is why fundraisers are so keen on leaving a legacy whenever they discuss the donor journey in a bit more detail.

It is a vital income source for many charities as it provides them with the ability to access different funds that will help them achieve their goals and help those they set out to help. It is a heart-warming way for individuals to say thank you to charities that have done something for them or that mean a lot to them.

How Much is Raised in Legacy Income?

You can clearly see just how important legacy income is to charities when you begin to acknowledge how much they raise every year. There has currently been about £3billion raised by legacy income. To put that figure into context, it’s the equivalent of eight Children in Need campaigns.

Local health charities have indicated that around 50% of the voluntary income that they raise is the product of legacy giving. On average, people donate a figure between £3000 to £30,000 for legacy income. This means that they have the chance to increase the income of a charity by a significant amount, even if only a small percentage of each gift is donated.

When is Income from Legacy Recognised?

There can often be issues surrounding charities recognising when a donation has come from legacy income. There are now criteria in place, thanks to the Statement of Recommended Practice (SORP), that outline when income from legacies will be recognised. The criteria is as follows:

  • Entitlement: To meet the criteria of entitlement, control over the rights and other access to different economic benefits of the legacy need to be passed over to the charity.
  • Probable: This means that it is likely the economic benefits which accompany the transaction are going to be passed down to the charity.
  • Measurement: The value of the income is able to be measured in a reliable way, as can the costs which are incurred when receiving the legacy.

It is worth noting that the criteria of entitlement cannot be met until the benefactor passes away. This is why legacy income is usually left in somebody’s will.

Legacy Income is Increasing

In recent news, it has been confirmed that the amount which is getting left in legacy income is increasing and predicted to reach a total of around £5billion by 2030. There have already been record numbers obtained in 2021 and 2022 (as discussed above), and with the trajectory that donations are going on, this is only likely to increase.

Legacy foresight has predicted that the overall income from legacy is likely going to be worth £19.6million between now and 2025. On top of that, it is estimated to reach £23billion in the second half of the decade. This means that charities will have subsequently received the £5billion in legacy income from a different 146,000 bequests.

Explaining the Upward Trend

When you consider the history of legacy income, there has been an upward trend in place since the 90s, with donations growing by about £800million in total. This has led to an annual growth rate of 4.5% for the year.

When you consider inflation, income across the UK is up by 2.7% a year, meaning the actual value of gifts in wills throughout the UK to different charities has doubled throughout the last 30 years. Pair this with the fact that more people are donating to charity in their will, with bequests rising by about 50% in recent years. The upward trend and estimated total of £5billion is not unrealistic.

The Impact of the Baby Boomer Generation

According to Legacy Foresight, another large contributing factor towards the increased figures of Legacy Income is the baby boomer generation. This generation consists of people who were born between 1946 and 1964 during the post-WW2 baby boom. This generation has a wealth and lifestyle that, on average, exceeds that of others. This has resulted in an increase in donations and means that by the year 2050, the amount of legacy income could double.

About 40% of all deaths in the UK have a Will, and a further 16% of those wills contain charitable donations. On average, each Will has about 3.3% charitable gifts contained within, with about 38% of charitable wills containing one charitable bequest and then 28% containing over four.

What Charities Are Benefitting the Most?

With the increased figures, all charities around the UK are benefitting; however, there are some sub-sectors that have seen a large amount of growth in the past few years. These include air ambulances, arts and education charities, mental health charities, NHS hospitals and wildlife trusts.

Do You Need Assistance with Your Will?

If you are putting together your Will and are interested in leaving charitable gifts, then you should be sure that you are asking for help to ensure everything is valid and legal. At Probates Online, our team of experts are on hand to assist you with all of the different aspects of putting together a Will. If you require assistance or have further questions, please do not hesitate to get in touch.