City pilots enhanced eldercare services

For many adults, the prospect of disability or dementia raises an increasingly troubling question the more they age: who will manage their money and ensure it is used according to their wishes if they can no longer make sound decisions themselves?

To address this challenge, Shanghai has launched a pilot program that combines advanced guardianship with eldercare service trusts, creating a framework to protect seniors' assets while ensuring continued access to funds for care and daily living needs.

The pilot program changes the traditional arrangement in which guardianship rights and property rights are tightly linked, thus reducing the risks of asset misappropriation and conflicts of interest, said Zhu Junsheng, former research director at the Research Center for China Insurance and Pension Finance at Tsinghua University PBC School of Finance.

The program provides a more reliable eldercare protection solution for groups such as seniors living alone, families who have lost their only child, and families in which elderly parents care for disabled adult children, Zhu said.

As cognitive functions and physical health change, seniors may be unable to use their own bank deposits or real estate to pay for care expenses. Bank cards and certificates of deposit are also often difficult for family members to manage on their behalf. At the same time, unclear authority over assets can make it easier for guardians to misappropriate property.

The pilot program introduces, for the first time, the concepts of a designated trustee of the property and a prearranged payment mechanism, addressing the practical problem that disabled or cognitively impaired seniors may have money but be unable to spend it.

The program enables a person to appoint a trusted individual or organization, including an appointed guardian, as the designated trust property manager. Once the settlor becomes incapacitated, the manager may issue instructions to the trustee for the payment of eldercare service expenses.

Shanghai authorities said on May 15 that by the end of 2025, Shanghai had 5.84 million residents aged 60 and above, accounting for approximately 37.6 percent of the city's registered population.

To address the challenges in pension finance, Shanghai International Trust Co, also known as Shanghai Trust, has already launched a service package combining advanced guardianship with trusts.

An 81-year-old man living in Shanghai's Huangpu district is the sole caregiver and guardian of his disabled wife and his son who has a mental disability. He worries that if he becomes incapacitated or passes away, there will be no one to care for them. In April, the man signed an advanced guardianship agreement with his community residents' committee and a notary office, specifying that the guardian would make medical and caregiving decisions if he became incapacitated. At the same time, he transferred assets into a trust account, and Shanghai Trust was instructed to make payments for living expenses, nursing care and other costs according to his wishes. This arrangement created a clear division of responsibilities.

The primary function of an eldercare service trust is to ensure eldercare payments and connect them with service resources. In Zhu's view, the deeper breakthrough represented by Shanghai's new policy is the integration of eldercare service trusts with the broader eldercare service system.

Chen Bing, general manager of Shanghai Trust, said the essence of an eldercare service trust is an open and collaborative ecosystem platform aimed at improving access to eldercare services and creating deeper coordination between financial services and social services.