Money out of mind

As with many families, my partner and I contribute to the living situation of an aged relative, who is currently living in a facility for seniors. We share this contribution with other members of her family, and in addition to paying directly for things like laundry service and supplemental meals, we also manage her pension and other social service income, which are directly deposited into her savings account. Another member of the woman’s family has the bank ATM card, with which that person can make money transfers to cover her care. In our case, we have the passbook, which can also be used to transfer money but not to withdraw cash from the account. Often we make necessary payments on her behalf and then transfer money from her account to reimburse ourselves.

This system is not uncommon, but it isn’t really legitimate, either, since we are not registered proxies for the woman. Because she has a cognitive disability owing to her age, she cannot handle her assets herself and thus relies on family to manage her finances, but legally speaking we—meaning not only my partner and I, but the other members of her family—should have registered as proxies with power of attorney well before she started losing her mental faculties. Now it is too late, and we are basically gaming the system. No one has prevented us from doing this because no one has complained, but recently banks have started phasing out passbooks in order to save money and paper. All records are being transferred to online systems, so we are afraid that once the current passbook fills up, we will not be able to get a new one, and thus will not have access to her account, since we can’t apply for an extra ATM card without her written compliance, which, legally, she can’t give because of her mental state.

A recent article that appeared in the Asahi Shimbun discussed this problem in more general terms, and it appears that our dilemma is one that many families also face. In principle, cash savings, real estate, and other assets owned by people who lose their cognitive functions cannot be touched except by people who have been granted such access by a court. The Civil Code says that if a person has no ability to make judgements regarding legal actions, those actions are not recognized. According to Mitsui Sumitomo Trust Bank, as of 2020, the amount of cash in Japanese bank accounts that has been frozen because their signatories have lost cognitive faculties amounts to ¥175 trillion. In terms of real estate and other assets, ¥80 trillion. That’s the equivalent of 8 percent of all household assets in Japan. By 2040, frozen assets are projected to reach ¥349 trillion, or 12 percent of all household assets. “Frozen” means that this money cannot be spent or otherwise circulated in the economy, which will slow down even further as a result. 

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