COVID Makes Bequest Asks More Delicate

COVID-19 was the third leading cause of death in the United States during 2020, with heart disease and cancer in their usual positions in the top two spots, respectively. The nation’s death rate increased during 2020 for the first time since 2017, according to provisional data from the Centers for Disease Control and Prevention (CDC).

COVID fueled the age-adjusted rate increase of 15.9% — from 715.2 deaths per 100,000 people to 828.7 per 100,000. As of June 28 of this year, 33.6 million Americans had been diagnosed with COVID-19 and 604,000 of those patients died, according to CDC data.

Despite the blaring headlines of diagnosis and death, the percentage of Americans with a will did not significantly change during 2020, according to data from caring.com What’s head-scratchingly worse, middle-aged and older adults were less likely to have wills than the previous year. And, the data showed that people 18-34 were 16% more likely to have wills than those 35-54.

It’s not as if COVID didn’t get people thinking about bequests: 35% of those surveyed by caring.com thought there is a greater need for a will but had not yet done anything. The polling data showed that two of three people surveyed do not have estate planning documents.

Giving USA’s revised estimate for bequests for 2019 is $37.99 billion in current dollars, or $38.45 billion in inflation-adjusted dollars. The estimate for 2020 is $41.91 billion, representing growth of 10.3% in current dollars and 9% in inflation-adjusted terms.

That 2020 estimate might be low because many government offices where estate plans are filed were closed or slowed due to COVID-19, according to planned giving expert Peggy Calhoun, ACFRE, in Fort Lauderdale, Fla. “With people not working to capacity, it’s all the more reason bequest data might not be as accurate as it would be in a normal year,” said Calhoun.

More than half of deaths in the U.S. during 2020 were people 80 or older. According to data from statista.com, life expectancy in the United States has increased from 39.4 years in 1860 (when it first started being tracked) to 78.9 years in 2020. Medical advances, fewer wars and less infant mortality are directly attributable to the increase. But, a decline since 2015 is attributed to bad diet, sedentary lifestyles, high medical costs, and increasing rates of suicide and drug use.

COVID-19 has “mortality staring people in the face,” said Barlow T. Mann, chief operating officer of planned giving firm Sharpe Group in Memphis, Tenn. Most people make ‘final operative estate plans’ within a year or so of their death,” Mann explained. The pandemic might have changed that thinking. He expects “a bump in those with charitable bequests” in estate plans.

Both Mann and Calhoun said that COVID prevented people from seeking medical care for other life-threatening ailments and expect the number of deaths from those causes to increase during the next few years.

Wealth will also play a large part in a surge of bequest giving, according to Mann. “Macro-economic factors do more on the positive side of people including charities in their wills,” said Mann. He expects an increase for the next 10 to 20 years. Of course, the benefactor’s family will always come first, he said.

A majority of bequests will be from “people who have been frequent, long-term donors,” said Mann. However, organizations do receive gifts “out of the blue,” but it is a relatively small number, maybe one in five, and 30% of estate gifts are from people who were never regular contributors, he said.

Not all donors are at the right point in their lives to consider making or accelerating their bequests. That decision depends on a number of factors, including the donor’s stage in life, family circumstances and current financial situation. Those who are able to accelerate their gifts, however, can reap the benefit of seeing and experiencing the impact of their generosity during their lifetimes and may in turn be inspired to make even more and larger gifts, Mann explained.

High-capacity donors sometimes have concerns that keep them from making larger gifts. They might fear they will outlive their money and become a burden on others, or worry that unforeseen economic or medical emergencies could deplete their savings, Mann said. Some older donors might shy away from making larger outright or irrevocable gifts. They would instead make revocable bequests by will, trust or beneficiary provision, he explained.

Giving a donor options is key, and that means bringing up the subject in written and online communications with donors. “That’s really not something many fundraisers are comfortable bringing up in a Zoom call,” according to Calhoun. Consistent communication is essential to maintaining long-term relationships, Mann said. Most of the national and large regional nonprofits have estate planning as part of the organizational website.

Calhoun agrees that consistent messaging is important. There has been an uptick in mailers on planned giving and representatives of larger charities with robust estate planning operations have been busy, she said. And while fundraisers routinely run wealth screening against the organization’s database, many potential bequest donors are self-identifying.

It’s not always about cash. Some donors in their 60s and 70s are turning over assets, such as insurance policies, annuities or appreciated stock. Those gifts probably would not be counted in the planned giving numbers.

“Throw in COVID-19 and that’s all the more reason information on bequests might not be as accurate as would be in a normal year,” Calhoun said.