[Invest&Law] Adult Guardianship System Protecting "Dementia Money"

Assets Held by Dementia Patients Reach 154 Trillion Won in 2023
Expected to Climb to 448 Trillion Won by 2050
Adult Guardianship Cases on the Rise Every Year

In 2020, a dispute over management rights erupted within Hankook & Company Group when the children of Honorary Chairman Cho Yangrae filed for an adult guardianship trial, citing concerns about his mental health. In 2017, a limited guardianship was initiated for Lotte Group General Chairman Shin Kyukho, with the exercise of the guardian's shareholder rights and other actions conducted under court approval.

The adult guardianship system, once considered a key variable in determining the direction of management rights in large corporations, is now drawing attention among the general public as a way to safely manage so-called "dementia money." According to a survey by the National Health Insurance Service and others, as of 2023, the assets held by dementia patients amounted to 154 trillion won. By 2050, this figure is projected to increase to approximately 448 trillion won.

Statistics also show a steady rise in cases related to adult guardianship. According to the Judicial Yearbook, the number of adult guardianship cases filed was 6,984 in 2019, 8,180 in 2020, 8,605 in 2021, 8,324 in 2022, and 8,823 in 2023, demonstrating an upward trend.

Law firms report a continued stream of inquiries regarding adult guardianship in relation to dementia money. In one case, an individual in his 80s, Mr. A, had a wife suffering from dementia. He visited a bank with his wife's caregiver and withdrew hundreds of millions of won in cash. He also intended to sell real estate registered under his wife's name. Their children barely managed to stop him, but in reality, Mr. A himself was also a dementia patient, though he refused to undergo an official medical diagnosis. Concerned that all of their parents' assets might disappear under the influence of a third party, the children decided to file for adult guardianship for their parents before it was too late.

The adult guardianship system is largely divided into two types. "Statutory guardianship" is when the court appoints a guardian after a person develops mental impairment, while "voluntary guardianship" involves entering into a contract with a guardian and specifying management details in advance while the person is still capable of judgment. Among these, voluntary guardianship is considered an ideal alternative, as it allows individuals to plan for their later years according to their own wishes. Attorney Kim Sungwoo (Judicial Research and Training Institute, 31st class) of Yulchon LLC stated, "The voluntary guardianship system is the most faithful realization of the ideals of private autonomy and respect for self-determination," adding that "it needs to be further promoted."

However, experts point out that institutional improvements are needed for more active utilization. Attorney Bae Kwangyeol (3rd Bar Exam), of the non-profit OnYul, noted, "To actually initiate voluntary guardianship, procedures such as registration and the appointment of a supervisor are even more complicated than statutory guardianship." He also pointed out, "Since family members cannot serve as guardianship supervisors, additional fees are incurred, which is a limitation to more active use." Attorney Kim also commented, "There needs to be discussion on measures to prevent abuse, such as cases where voluntary guardianship contracts are signed by family members or third parties even when the person's mental capacity has already declined."

By Seo Hayeon, Legal Times Reporter

※This article is based on content supplied by Law Times.

This content was produced with the assistance of AI translation services.