🚨 Dementia Money: New Challenges and Asset Protection in an Aging Society

Today Korean Social News | 2025.05.30

📌 Dementia Patients Hold 154 Trillion Won...Government Pushes for Guardianship and Trust System Reforms

💬 The government is working to improve guardianship and trust systems to solve asset management problems for dementia patients. Currently, dementia patient assets are estimated at 154 trillion won and are expected to reach 488 trillion won by 2050. However, the use of voluntary guardianship and testamentary substitute trusts is low, and there are concerns about the lack of expertise among adult guardians and economic abuse. The government plans to strengthen education about guardianship and trust systems and financial products, and to improve the expertise of private trusts. They are also considering providing public trusts for vulnerable groups and connecting guardianship systems with private trusts.

Summary

• Dementia money refers to assets owned by dementia patients, currently at 154 trillion won (6.4% of GDP).
• By 2050, it is expected to grow to 488 trillion won (15.6% of GDP), more than tripling.
• Improving guardianship and trust systems is urgent to solve asset freezing and management problems.

1️⃣ Definition

Dementia money means assets owned by dementia patients that are effectively frozen due to loss of decision-making ability. These assets should be used for medical treatment and living expenses, but often cannot be properly used due to lack of proper management systems.

As of 2023, 760,000 out of 1.24 million dementia patients aged 65 and older own assets, with an average of about 200 million won per person.

💡 Why is this important?

• Elderly dementia patients, who make up only 2.4% of the total population, own massive assets equivalent to 6.4% of GDP.
• Asset freezing due to dementia negatively affects not only individuals and families but also the entire economy's circulation.
• We must protect dementia patients' assets from unauthorized use, fraud, and economic abuse.
• As we approach a super-aged society, building systematic asset management systems is urgent.

2️⃣ Current Status and Problems of Dementia Money

📕 Scale and Prospects of Dementia Money

• The current scale of dementia money is significant. Key facts are:

  • As of 2023, assets of dementia patients aged 65 and older total 154 trillion won, equivalent to 6.4% of Korea's GDP.
  • Asset composition includes 114 trillion won in real estate (74.1%), 33.4 trillion won in financial assets (21.7%), and 6.4 trillion won in income.
  • With an average of about 200 million won per person, elderly dementia patients who make up only 2.4% of the population hold a significant portion of assets.
  • Severely ill dementia patients requiring hospitalization number 78,000, and their assets alone reach 4.5 trillion won.

• Dementia money is expected to grow rapidly in the future. Key projections are:

  • The number of dementia patients is expected to surge to 1.79 million in 2030, 2.85 million in 2040, and 3.97 million in 2050.
  • Accordingly, dementia money is projected to reach 488 trillion won by 2050, more than tripling the current amount.
  • Dementia money in 2050 is estimated to account for 15.6% of the projected GDP at that time.
  • The problem could become more serious as the second baby boom generation (born 1964-1974), who mainly own hard-to-liquidate real estate assets, enters old age.

📕 Major Problems in Managing Dementia Money

• Individual-level problems are serious. Key issues include:

  • Asset freezing: When people lose decision-making ability due to dementia, they cannot sell or withdraw their own assets, creating situations where they cannot use money when they need it for treatment or care.
  • Unauthorized use and fraud: Cases of unauthorized withdrawals by caregivers or family members are frequent, including actual cases where caregivers were arrested for withdrawing over 1 billion won from dementia patients' accounts.
  • Economic abuse: Cases of inheritance disputes and economic abuse among family members are increasing, with more instances of exploiting dementia patients' assets.
  • Lack of management systems: Due to inadequate asset management systems, some people with assets end up becoming basic livelihood recipients.

• Social-level problems also exist. Key issues include:

  • Breakdown of economic circulation: Massive assets being tied up for long periods threaten the economic circulation structure that should lead to investment and consumption.
  • Decreased productivity and liquidity: Concerns are raised that overall social productivity and liquidity could decline, leading to economic recession.
  • Increased social costs: Rising medical and care costs for dementia patients burden national finances.
  • Insufficient institutional infrastructure: Current guardianship and trust systems alone cannot effectively manage the rapidly growing dementia money.

Major Challenges in Managing Dementia Money

1. Preventive asset management: Activating systems that allow people to plan asset management before dementia onset
2. Strengthening expertise: Solving the lack of expertise among adult guardians and expanding public guardianship systems
3. System improvement: Increasing utilization of voluntary guardianship systems with complex procedures and low awareness
4. Fraud prevention: Preparing measures to prevent financial fraud and economic abuse targeting dementia patients
5. Introducing public trusts: Building public trust systems for vulnerable groups and connecting them with private trusts

3️⃣ Current Systems and Improvement Plans

✅ Current Asset Management Systems for Dementia Patients

• Guardianship systems play a key role. Major systems include:

  • Adult guardianship system: A system where family courts appoint guardians to support asset management and daily life for adults who lack decision-making ability due to dementia.
  • Voluntary guardianship system: A system where people designate trusted persons as guardians in advance while mentally capable, with only 229 cases in the past 10 years, showing very low utilization.
  • Public dementia guardianship system: A system where local governments request guardianship trials and support guardianship activities for dementia elderly who have no family or are economically disadvantaged.
  • However, the national average activity rate of public dementia guardians is only 15%, raising questions about effectiveness.

• Trust systems and financial products are also partially utilized. Key status includes:

  • Testamentary substitute trusts: A system where people entrust assets to trust companies during their lifetime for direct transfer to heirs after death without inheritance procedures, but utilization is low due to system deficiencies and low awareness.
  • Family trusts: A system where people delegate asset management to trusted family members, actively used in Japan but not yet institutionalized in Korea.
  • Private trust products: Various trust products provided by banks and trust companies, but accessibility for ordinary people is low due to complex procedures and high costs.
  • The government diagnoses that current systems are inadequate in both quantity and quality.

✅ Government Improvement Plans and International Cases

• The government is pursuing comprehensive improvement measures. Key plans include:

  • Activating trust systems: Plans to improve institutional deficiencies in testamentary substitute trusts and create an environment where people can safely entrust assets before dementia onset.
  • Improving guardianship systems: Simplifying complex procedures of voluntary guardianship systems and strengthening education and support systems to enhance adult guardians' expertise.
  • Introducing public trusts: Considering introduction of public trust systems where the government directly provides trust services for vulnerable groups who cannot use private trusts.
  • Building integrated systems: Planning to build integrated systems that connect guardianship systems with private trusts for professional asset management.

• There is much to learn from international cases. Key international examples include:

  • Japan: As the world's most aged country with dementia patient assets reaching 2,400 trillion won, actively utilizing family trusts and adult guardianship systems. From 2025, they introduced "family support securities accounts" allowing proxies to manage account holders' assets.
  • Germany: Well-developed legal guardianship systems with professional guardians providing specialized services.
  • United States: Highly developed trust systems supporting elderly asset management through various forms of trust products.
  • Korea also needs to advance its dementia money management systems by referring to these international cases.

4️⃣ Related Terms

🔎 Adult Guardianship System

• The adult guardianship system is a legal system that protects adults with insufficient decision-making ability.
• The adult guardianship system is a system where guardians appointed by family court decisions or guardianship contracts provide comprehensive protection and support for asset management and daily life for adults who need help with handling affairs due to dementia and other conditions.
• The adult guardianship system is divided into four types. First, adult guardianship applies when the ability to handle affairs is persistently lacking. Second, limited guardianship applies when the ability to handle affairs is insufficient. Third, specific guardianship applies when temporary support or support for specific affairs is needed. Fourth, voluntary guardianship is a system where people designate guardians in advance.
• While the adult guardianship system is important for protecting dementia patients' assets and acting as legal representatives, its utilization rate remains low due to low awareness and complex procedures. Also, most guardians are designated as family members, raising concerns about lack of expertise.

🔎 Trust System

• The trust system is a system where people entrust assets to reliable institutions for management.
• The trust system is where asset owners (trustors) transfer asset titles to trusted parties (trustees) and have trustees manage, operate, and dispose of assets for beneficiaries according to purposes set by trustors.
• Major forms of trust systems include: First, testamentary substitute trusts where people set up trusts during their lifetime to transfer assets directly to heirs after death without inheritance procedures. Second, family trusts where family members delegate asset management among themselves. Third, commercial trusts which are professional trust services provided by banks or trust companies.
• While trust systems are very useful as they allow people to plan asset management before dementia onset, utilization rates are low due to complex procedures, high costs, and low awareness. The government is promoting activation of trust systems by improving these problems.

🔎 Public Trust

• Public trust is trust services provided directly by the government.
• Public trust refers to systems where the government or public institutions directly provide trust services for vulnerable groups who have difficulty using private trusts. This aims to provide basic asset management services to people who cannot receive services from private trust companies due to economic conditions or family relationships.
• Key characteristics of public trusts include: First, designed for easy access by ordinary people with low fees. Second, guaranteeing safe asset management based on public trust. Third, improving convenience by simplifying complex procedures. Fourth, focusing on asset protection for socially vulnerable groups.
• Public trusts are currently being considered for introduction and are expected to be important policy tools for protecting assets of vulnerable groups like dementia patients. Once introduced, all citizens will be able to receive basic asset management services regardless of income or asset size.

5️⃣ Frequently Asked Questions (FAQ)

Q: My parents were diagnosed with dementia. What should I do first to manage their assets?

A: To protect assets of parents diagnosed with dementia, applying for adult guardianship at family court is most important. Without court-appointed guardians, gifts or sale contracts made without decision-making ability cannot be canceled, potentially causing major asset losses. When applying for adult guardianship, you should choose the appropriate type among adult guardianship, limited guardianship, or specific guardianship based on your parents' condition. You should also clearly define the guardian's authority scope and consider appointing multiple guardians or guardian supervisors if needed. At the same time, accurately identifying currently held financial assets and real estate and making financial plans for future treatment and care costs is necessary. Building monitoring systems for major financial transactions to prevent fraud or economic abuse is also important. If possible, it's advisable to establish systematic plans with help from professionals (lawyers, social workers, etc.).

Q: What asset management methods can I prepare in advance before getting dementia?

A: Advance preparation before dementia onset is most important, and several methods can be used. First, conclude voluntary guardianship contracts to designate trusted persons as guardians in advance. This has the advantage of guaranteeing self-determination by directly reflecting one's will. Second, set up testamentary substitute trusts by entrusting assets to trust companies during lifetime and predetermining management methods. This enables stable asset management even after dementia onset. Third, conclude family trust contracts to delegate asset management to trusted family members. Fourth, receive regular health checkups along with cognitive function tests to enable early detection and response. Fifth, create lists of major assets and share them with family members for transparent management. Through such advance preparation, asset management according to one's will becomes possible even after dementia onset, and family conflicts or external economic abuse can be prevented.