retirement planning

Measures to Take Before Onset of Dementia

If you get dementia in the future, is it possible to have someone else make arrangements for you to live the kind of life you want or manage your property and invest it for you?

It is possible to actualize your wishes to the extent possible by entering into a voluntary guardianship contract and entrusting these matters to another person or with a family trust before the onset of dementia.

A voluntary guardianship agreement is a system in which you can have someone you trust act on your behalf to represent you in various contracts and manage your property if you suffer from dementia.

However, the asset management under this system is limited to the ordinary management and disposal of assets when necessary; it does not allow the proactive investment of the assets or buying replacement assets.

For example, a guardian cannot make effective use of land to build a rental house, buy new stock in lieu of the originally held stock, or buy mutual funds with higher returns.

For those who are thinking about the investment of their assets, the demerit of this [voluntary guardian system] is that the guardian who manages your assets if you have dementia will not be able to invest those assets.

Considering the needs of those who want to invest their assets, a voluntary guardianship agreement alone may not be enough.

In that case, it may be a good idea to use a contract called a family trust for the assets you plan to invest.

A family trust is a system in which you entrust your assets to a trusted family member, have them invested, and receive the profits from the trust or have someone else you designate receive the profits. The terms of the trust can be designed rather flexibly.

Although a trust can only manage and invest the assets contained in the trust, this is actually a merit given that the guardian cannot invest the assets.

However, a family trust alone will not solve every problem because, unlike the guardian, a trust cannot represent the person with dementia as a general matter.

Please keep in mind that the real issue here is not which system is better or worse than the other, rather how they can be combined for the most reliable use. That being said, there are situations when you only need to choose one of the systems when you are considering your and your family's situation and future aspirations.

Since a high degree of legal knowledge and experience is required to deal with dementia, please consult with a qualified legal professional. Please do not hesitate to let us know if Kobe Legal Partners can support you in making decisions about these systems.

-retirement planning