Legacy income – key considerations during these uncertain times

April 2, 2020

Blerta Clubb, Director of the Institute of Legacy Management and Head of Legacy Income at Save The Children shares how we can continue to maximise legacy income during these challenging times.

We’re under no illusion that today sees challenging times for us all personally and professionally. The legacy income sector will be impacted by this but there has already been great collaboration from various charity leaders calling on the government to provide a support package for our sector. This support to protect many hospices and charities so that they can continue to deliver their amazing work through the crisis cannot come soon enough.

As with many sectors, legacy income has adapted to be able to cope with the new ways of working and, as much as possible, we’ve tried to retain a business as usual mindset. Moving away from post and using email has allowed us to communicate with personal representatives and solicitors more regularly and effectively to ensure that we can still receive gifts in a timely manner.

With the forecast that the coronavirus outbreak could significantly weaken the UK economy, there will inevitably be an impact on legacy income. First, we had the stock market plummeting and then we had the recent announcement about the property market where buyers and sellers should pause purchases until after the Covid-19 crisis has passed. All of these changes in behaviour will have a knock-on effect to legacy income in one way or another.

Legacy Foresight has recently updated its legacy market forecast to cater for Covid-19 and they anticipate that legacy income could drop by as much as 9% this year. This is mainly driven by the value of our gifts, likely to be lower than anticipated and the pressures put on various administrative functions we depend on to receive our legacies.

There are some key areas for us to consider and keep in mind regularly to try and mitigate an impact to our incomes as much as possible.

Housing market

It is reassuring to see that there isn’t an absolute ban on inspections following the announcement last week. As many legacy asset sales are of vacant properties, some inspections may be possible. However, it is likely that the number of valuers available to undertake inspections will be much reduced.  The recent announcement of the mortgage market going into lockdown will also slow the market significantly.

Andrew from Berry’s advice is to consider carefully if a property needs to come to the market at this point given the uncertainty and already known difficulties in obtaining loan finance.

This week saw a webinar with Rightmove and Mark Hayward from NAEA Propertymark where the message was loud and clear that even though we are going through this unprecedented time – they are seeing a high volume of interest on Rightmove property searches.

Like all of us, estate agents have had to adapt very quickly to the changes and are being very proactive in how they facilitate remote viewings. They are very good at creating pipelines to get potential buyers lined up and no matter what stage of the sale you are at, it is recommended that you speak to your local estate agents as they will know the area, the property and their workflows well.

The key takeaway from the webinar was that ongoing and enhanced communication between the solicitor/conveyancer, agents and the buyer/seller are going to be vital during these times. I felt assured that the Government is very much keen to help keep the market moving forward and the moment this isolation period is over, there should be a surge of potential buyers flooding the market. 

Stock and Investment

I am having many conversations as to what is best – should we hold on to stock or should we sell? As a sector, our approach in the past has always been to sell so that our charities could have access to the cash to continue our amazing work.

With the FTSE 100 having fallen by almost a third since February, we are now having to re-consider this approach. There is no right or wrong answer as this decision should be chosen according to your charities’ requirements and current organisational needs.

You should be having a discussion with your finance and executive team to properly consider what is the right decision for your charity, highlight these risks and review them regularly. These decisions depend on your charity’s scheme of delegation as you may need trustee approval e.g. at a finance committee or investment committee or full board.

Cash flow

Whilst cash flow is a huge challenge for many charities, there are some practical steps that we can do to try and keep this moving:

  1. Review your current cases and ensure that you are communicating via email where possible.
  2. If solicitors are holding estate funds, then they should be offering interim payments. Part of your case review process should be to ensure that you ask for an interim/final payment.
  3. Ask for that payment to be made via BACs. Ensure you have your bank details on your letterhead and confirm these by a phone call.
  4. Some charities are using essential key skeleton staff to visit their offices to collect/pay physical post and cheques. Digital means should be favoured, and latest government advice should be followed.
  5. With any new Smee & Ford notification make sure you call the solicitor to obtain their email address so that you can start the correspondence by email from the outset.
  6. Whilst members of your team may be balancing working life with home schooling, or caring for family members, flexibility is key during these times. In addition, you should also be thinking about resource whilst staff may be off work during this period – how you can upskill other colleagues from your wider teams so that you keep as much continuity as possible.

Legacy Foresight have indicated that as administrative delays unwind and income starts to flow from the anticipated increase in gifts, income could rise quite rapidly during 2021 and 2022. Over the five years of the forecast legacy income is still expected to grow; from £3.2bn today, rising by 14%-19%.

Be mindful and understanding of all the parties you are communicating with, including family members, solicitors, executors, Smee & Ford, HMCTS, banks and estate agents and be patient whilst everyone is navigating the new ways of remote working. ILM is in weekly contact with many of these stakeholders to continue the engagement and support for its members. Do keep an eye on your emails and make sure you join the ILM webinars when you can to keep up to date with the latest sector developments.

To end on a personal note, I’ve noticed how it’s become the norm and acceptable to have our young ‘colleagues’ in our home offices. I hope that the acceptance of families is here to stay, as it will make the lives of many home working people so much easier. My little boy has loved being part of many of my conference calls so much so that I’m not sure what life will look like after this isolation period is over.

Keep in contact with your peers, colleagues and family and stay safe in these challenging times. Continue to support each other and reach out to anyone who may need your help. We will get through this together.

By Blerta Clubb


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