When dementia freezes money, aging Korea turns to public trusts

Experts have called for South Korea’s new public trust pilot program for dementia patients to be expanded and paired with reforms to the country’s guardianship system, as the government moves to address the growing problem of frozen assets held by older people with cognitive decline.

The Ministry of Health and Welfare announced on Wednesday that it is launching a pilot program for what it calls “a safe asset management service for dementia patients.”

Under the program, the National Pension Service will sign trust contracts with basic pension recipients diagnosed with dementia or mild cognitive impairment, helping them use their assets toward medical, care and living expenses.

The government also plans to announce a broader package of measures to manage assets held by dementia patients through the Presidential Committee on Aging Society and Population Policy. The plan is expected to include reforms to private trust and guardianship systems.

According to the committee, assets held by older patients that effectively become frozen were estimated at 154 trillion won ($105 billion) in 2023 and are projected to rise to 488 trillion won by 2050.

Lee Yeon-ji, a professor at Inha University Law School, told local media the program is meaningful because it treats trust services as part of welfare, rather than as a tool for asset management or profit.

“It is meaningful as a welfare service that focuses on ensuring that a person’s assets are used safely for their own well-being,” Lee said.

But she said the pilot program should not be limited too narrowly to dementia patients receiving basic pensions. People without reliable guardians may also need public trust support, even if their cognitive ability remains normal, she said.

Seok Jae-eun, a social welfare professor at Hallym University, also said Korea needs a broader asset management system for older adults.

“Older adults should have an opportunity to comprehensively assess and redesign their assets as they enter old age,” Seok said.

Je Cheol-woong, a professor at Hanyang University Law School, pointed to the need to improve Korea’s adult guardianship system. Under the pilot program, dementia patients must have a guardian sign the trust contract with the National Pension Service, making the appointment of a suitable guardian a prerequisite for using the service.

But Korea’s adult guardianship system remains underused, and court decisions on appointing guardians often take months. The country also faces a shortage of trained guardians, Je said.

“In Korea, it usually takes more than six months, and sometimes up to a year, for courts to appoint a guardian,” Je said, adding that the government should consider shorter procedures for guardianship applications linked to public trust services.

Another unresolved issue is the range of assets that can be placed in trust. The pilot program currently limits eligible assets to cash and cash-like assets.

“Real estate accounts for a large share of assets held by older adults, so there needs to be further discussion on assets that are not held in cash,” Lee said.

The dementia asset management measures were originally expected to be included in the fifth basic plan on low birth rates and aging in 2025, but were delayed as the presidential committee was reorganized into a population strategy body.

The broader plan is expected to include measures to expand the types of assets eligible for private trusts and the range of institutions allowed to manage them.

“The measures will be included in the first population strategy plan after the reorganization, under the title of asset management protection measures for older dementia patients,” a committee official said.

The plan is being discussed with the Justice Ministry and the Financial Services Commission and may include reforms to guardianship and private trust systems, the official added.