The disgraced lawyer, 81, had a mental assessment on February 26, which determined that he suffers from "delusion and disorganized thoughts".
Tom's younger brother Robert ordered the assessment as part of his petition to become the attorney's permanent conservator.
Dr Nathan Lavid, a forensic and clinical psychiatrist, said Tom is medically unfit to attend any court proceedings "for the foreseeable future," in a capacity declaration obtained by People.
"Dementia impairs his ability to understand the hearing. His emotional distress is directly related to his dementia and exacerbated by his confusion," Nathan wrote.
He added that there is "moderate impairment" of Tom's short-term memory, ability to concentrate, recognition of familiar objects and places and logical reasoning.
Nathan claimed Tom suffers from "moderate" delusion and disorganized thoughts.
RHOBH star Erika - who filed for divorce from Tom in November after 21 years of marriage - has not commented on her ex's health.
News of Tom's diagnosis comes a month after Robert asked to put Tom in a care facility following a "medical emergency".
Robert filed for conservatorship of the lawyer because Tom was suffering from "memory loss" following various lawsuits and the divorce filing.
He said: "At age 81, Tom's current condition has sadly deteriorated to the point where he cannot care for himself without assistance.
"His short-term memory is severely compromised and, on information and belief, he is often not oriented as to date, time or place."
Robert added that he "has first-hand knowledge that Tom lives alone and can not care for himself."
He was granted temporary conservatorship in Febrary until March 30 and is going to pursue a permanent extension.
Back in December, Tom was sued for allegedly embezzling millions from the families of plane crash victims.
He reportedly took settlement proceeds that should have gone to his clients, "including the widows and orphans who lost loved ones in the tragic crash of Lion Air Flight 610.”
Tom allegedly did so to “continue funding his and Erika’s lavish Beverly Hills lifestyles - claims which the exes have denied.
The lawyer was held in civil contempt and his assets were frozen when he failed to explain why he couldn’t pay the $2 million he owed to four of his clients.