Double dependants

As we notice a rise in clients having ‘double dependants’, we look at the impact that this can have on financial decision-making and explore some strategies that can help manage this situation.

| 3 min read

One of the questions we ask clients when we begin to look after their affairs, is whether they have any 'dependants'. A dependant is anyone who is reliant on you for a financial or basic living need, any children and potentially a non-working spouse for example.

What I seem to be noticing more of, is clients with what we call 'double dependants’. This is, rather than simply having to provide for your children, we are seeing instances where clients are also having to provide for their parents simultaneously. This can take the shape of financial dependence (paying care fees, for example) or physical dependence (such as providing care at home).

As 'double dependants’ are not usually planned for, being in this situation can add to financial and mental stress and can often change the way clients feel, behave and treat their finances and investments. Often, but not exclusively, we find it’s the clients in their 50's who begin to find themselves with double dependants, as they’re at an age where they can have children who are in or have just left education, and also have parents in their mid-70's to early 80's.

Additional stresses, be it health, the demands of work, or the economic uncertainty that events such as COVID-19 bring, can often compound any issues and can make for a very demanding environment.

So, if this is this is familiar to you, how do you manage this situation?

1. Don't try to do everything

Use your advisers to your advantage. A financial adviser, investment manager, solicitor and/or accountant can make life much easier and potentially cheaper. Your investments do not have to require your constant attention, as your advisers can do much of the heavy lifting for you. From a tax standpoint, there may be innovative ways to support your dependants, for example, with school or university fees, helping to fund care fees, legal arrangements around funding parents' care from their estates, and much more. There are often lots of possibilities, the key is to have the right support network and bring them into your circle so they can help you solve these challenges.

2. Don't be afraid to change your life plans

When you find yourself supporting additional family members, you may well find that your financial affairs look rather different than you originally planned. This 'double dependency' situation can often result in extra demands on your income or mean dipping into capital assets. The important thing is to recognise this and act early. Rather than raiding your savings account, it’s always worth exploring whether there’s another route?

3. Use your seniority

Aside from the demands on your finances, you may find the demands on your time are equally as acute. Is there a way you can delegate some of your workplace activities to a member of your team, or hire in some extra support? Could flexible working assist in finding a balance between the priorities in your life? 2020 has seen significant change to working habits, some of which may 'stick' as the world moves on past COVID-19. Would varying your working hours or days be of benefit to you? More remote working? These are all areas to explore which may assist in getting the balance right in this rather demanding time of life.

I hope the points raised here help you understand the options that might be available to you.

Nothing on this website should be construed as personal advice based on your circumstances. No news or research item is a personal recommendation to deal.

Double dependants

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The information in this article is based on our understanding of UK Legislation, Taxation and HMRC guidance, all of which are subject to change. The tax treatment of pensions depends on individual circumstances and is subject to change in future. This article is solely for information purposes and does not constitute advice or a personal recommendation.

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