The difficult reality faced by Mr. A, 59, who cares for his mother with dementia living in a nursing facility, is a story many middle-aged people can empathize with. When he urgently needed 15 million won for medical and nursing care expenses, he tried to withdraw 250 million won in savings from his mother's account but had to turn around at the bank counter. This is because the financial institution was restricting withdrawals by family members, worried about future legal issues such as inheritance disputes. Following the bank employee's advice, since Mr. A did not set up a trust in advance, he had to apply to the court to initiate guardianship for an adult, and he could not use the funds until several months had passed. Such a structure that cannot respond to urgent financial needs brings great anxiety to families of dementia patients.
Mr. B, 74, diagnosed with mild cognitive impairment, does not yet have major difficulties in daily life but feels a decline in memory and concentration and is anxious about the deterioration of dementia. With voice phishing crimes targeting elderly people with dementia surging recently, worries about property management have deepened; it feels burdensome to leave it to children and insecure to manage it himself. As aging accelerates, the asset scale of dementia patients surpassed 17.2 trillion won last year and is projected to increase to 488 trillion won by 2050. As the economic scale grows and assets of the elderly increase, risks of mismanagement and financial fraud are also expanding.
The core issue is how to protect vast assets that are effectively unusable due to impaired judgment caused by dementia. It is most effective to decide in advance when and how to use currently held assets and delegate authority to whom before decision-making ability declines. While response after onset of dementia is possible, legal procedures take several months, making it difficult to handle emergency situations appropriately. Against this background, the government and the National Pension Service have prepared a plan to publicly manage assets of elderly people with dementia or mild cognitive impairment and disburse medical and living expenses according to planned cash flows, starting a pilot program for the Dementia Safe Asset Management Service this month.
The core of the service is not simple storage but designing to automatically allocate monthly necessary costs so that assets are actually used for living. Unforeseen high-value withdrawals or contract changes are subject to review procedures to prevent fraud or economic abuse in advance. Eligible participants include not only dementia patients but also elderly people with mild cognitive impairment who find property management difficult; for dementia patients, appointing a guardian is mandatory. If an appropriate proxy is unavailable, the government will link and support through public guardians. The scope of assets accepts up to 1 billion won in cash assets, and to protect the middle class, it has a cost structure lower than private trusts, making it free for basic pension recipients and about 0.5% per year for others.
If asset scale exceeds 1 billion won or if you wish to manage real estate as well, you should consider private financial products such as dementia trusts. Banks and insurance companies provide various products such as testamentary substitute trusts, dementia safe trusts, and insurance claim rights trusts to automate property distribution after death and living expense payments. Testamentary substitute trusts are automatically distributed after death and can reduce legal disputes, but initial costs are high, while insurance claim rights trusts are suitable for multi-child families for managing inheritance funds. Since public trusts aim at asset protection and expenditure control and private trusts aim at asset growth and transfer, a dualization strategy utilizing both products as complements is needed. However, the public trust starting this month is a pilot project with limitations on targets and amounts, and is planned to be expanded to the main business from 2028.