Managing Dementia Money in Aging Societies: Lessons from the Republic of Korea

As population aging accelerates in the Republic of Korea, the prevalence of dementia is expected to rise sharply, bringing the issue of “dementia money” to the forefront of policy discussions. According to the 2023 Dementia Epidemiology Survey conducted by the Ministry of Health and Welfare, the number of older adults living with dementia is projected to reach 1.21 million by 2030, 1.80 million by 2040, and 2.26 million by 2050.

Dementia money refers to assets held by individuals with dementia, including real estate, financial assets, and income such as wages or pensions. As demographic aging deepens, the scale of these assets is expected to expand significantly. A comprehensive survey conducted by the Presidential Committee on Ageing Society and Population Policy in May 2025 estimated the total volume of dementia money at approximately KRW154 trillion (USD374.5 billion) in 2023—equivalent to about 6.4% of gross domestic product. This figure is projected to rise to KRW488 trillion (USD374.5 billion) by 2050, exceeding 15% of GDP. If these assets remain idle due to impaired decision-making capacity, they may impose broader economic costs while limiting the ability of affected individuals to finance their own care and maintain a dignified standard of living.

Figure 1: Trends in Dementia Money

Figure 2: Overview of Dementia Money in 2023

Source: National Health Insurance Service; Center for Health and Finance at Seoul National University, 2025.

When dementia constrains an individual’s ability to manage assets, those assets may no longer be mobilized for consumption or investment, potentially weakening economic circulation. At the same time, individuals with dementia face heightened risks of financial abuse, asset misappropriation, or fraud by family members or third parties, which can undermine both their financial security and personal autonomy. As dementia has increasingly come to be recognized as a societal challenge rather than solely a medical issue, calls have grown for institutional mechanisms that can protect vulnerable individuals while ensuring that their assets are used for appropriate purposes.

Within this context, trust arrangements have attracted attention as a potential policy tool for managing dementia-related assets. Trusts can separate asset ownership from management, enabling professional oversight while directing funds toward the beneficiary’s needs in accordance with pre-agreed terms. In principle, they offer a way to safeguard assets, reduce misuse, and preserve the individual’s right to self-determination. However, the effectiveness of trust arrangements depends on the broader legal and institutional framework in which they operate. In Korea, existing regulatory constraints, limited public awareness, and weak alignment with complementary systems, such as adult guardianship and caregiving services, have constrained their wider adoption. Understanding these institutional challenges is therefore essential to assessing the role that trusts can play in addressing the growing issue of dementia money.

Designing a trust-based framework requires addressing several institutional challenges. 

First, reforms to the current trust system are needed to facilitate broader use of trusts, as existing institutional constraints have limited their adoption in Korea. Older adults hold a substantial share of their assets in real estate, often with outstanding mortgage liabilities. However, current regulations restrict the inclusion of liabilities and certain asset types in trust arrangements, preventing mortgaged properties from being placed in trust. Similar limitations apply to pension benefits and some insurance products, which are subject to nontransferability rules or narrow eligibility under existing laws. In addition, restrictions on delegation and sub-trust arrangements constrain the ability of trust companies to provide integrated services. As a result, trusts are typically limited to cash assets, reducing their effectiveness in managing the full range of dementia-related assets. Easing these regulatory constraints would enable more comprehensive and functional trust structures. 

Second, ongoing policy discussions on introducing a public trust scheme make it important to define an appropriate relationship between public and private trust services. The government has announced plans to pilot a Dementia Asset Management Support Service, under which a public institution would act as trustee and manage assets in accordance with agreed terms once dementia develops. Public trust schemes could help address low awareness, trust deficits, and cost concerns by enhancing credibility and improving accessibility. At the same time, private financial institutions have expanded offerings such as testamentary substitute trusts, with growing uptake and increasingly tailored services. Maintaining an appropriate balance between public and private provision will therefore be essential. Given fiscal considerations and the existing role of the private sector, public trust schemes could be targeted toward vulnerable groups with limited access to private services, consistent with international practices such as the United Kingdom’s Public Trustee model. 

Third, closer alignment between trust arrangements and the guardianship system would strengthen the overall framework for supporting people with dementia. While individuals may establish trusts in advance, the administration or modification of these arrangements often requires legal representation once cognitive impairment progresses. The guardianship system can play a complementary role by enabling guardians to conclude trust arrangements and manage distributions for care and living expenses. In practice, however, uptake remains limited due to low awareness and procedural complexity. Public and financial institutions could help address these barriers by providing information on guardianship at the point of trust formation and facilitating connections with potential guardians. Trust arrangements could also be more systematically integrated into the guardian appointment process, as seen in Japan’s Guardianship Support Trust system. Further efforts to streamline procedures and strengthen professional capacity would help expand the effective use of guardianship in this context. 

Finally, while trusts are designed primarily for asset management, people with dementia also require sustained caregiving support, highlighting the importance of linking trust arrangements with care services. At the time of trust establishment, individuals or their families could develop care plans to guide the use of trust assets. Ongoing coordination among trustees, caregivers, and family members would help ensure that expenditures remain aligned with evolving needs. International experience, such as Singapore’s Special Needs Trust Company, illustrates how trust structures can incorporate care planning and periodic review mechanisms. Given the limited reach of guardianship and declining family support in Korea, integrating trust arrangements with caregiving services could help mitigate risks of inadequate care and strengthen overall support systems.

Korea Institute of Finance website.