Many creatures hope to escape death. When such creatures are powerful and corrupt, they sometimes turn to rituals that can transform them into liches. However, immortality comes with a price, and these creatures lose the remaining shreds of their humanity in process.
If a lich exists long enough, it may reach a point where it feels it cannot learn any more in its present state and seeks other avenues to attain knowledge. The lich's interest turns away from the physical realm, and its soul voluntarily leaves its undead form and phylactery, using astral projection to travel across other planes of existence. The magic preserving the lich's body against the ravages of time weaken, usually causing the body to gradually deteriorate until only a skull or even a single skeletal hand remains; this advanced form of lich is known as a demilich. Despite its ruined body, a demilich is far from powerless; if disturbed, the skull will levitate and suck the souls from nearby living creatures.
Treasures fill the tomb, guarded by the lair’s keeper: the demilich. Having escaped death through lichdom, he houses his intelligence in a bejeweled skull, and his soul in a hidden phylactery. The demilich quickly dispatches trespassers, relieving the victims of any magic trinkets or tomes they might have.
Upon entering the lair of a demilich, players will be told, (by a disembodied voice) that they should turn back, never return, and never speak of this place. Should they choose not to heed the warning, says the voice, they should enter with no regrets.
A demilich is a creature that exists only partially in this dimension. Depending on the age of the lich, it may have anywhere from 50% - 85% damage reduction. The demilich is ethereal; to an extent that a +3 or better weapon is required to strike it.
The skull is merely a symbol of the lich. It does not help nor hinder the lich if it is destroyed, restrained, or immobilized. The souls within the gems will be released into the Dark Nether if the gems are destroyed. Very high-level magic is required to extract a housed soul; making resurrection almost impossible.
A demilich almost always has minions to guard its lair and phylactery. These can be nearly any type of influence-able creature, intelligent or not. The most powerful demilichs have other liches to guard their phylacteries in addition to their own.
A demilich, reduced to the appropriate "death" hit points, does not die. The skull/hand/spine de-animates, and falls to the floor. If the phylactery is not destroyed... the demilich will regenerate its conscious within 3-4 days.
A demilich is the magical equivalent to the Tarrasque. There are very few, if not 1-2. They are nearly indestructible, even harder to kill, and reserved for parties whose only challenges come from combatting deities.
A demilich's lair does not often contain basic valuables such as gold or gems (aside from the soul gems, which are only valuable if empty). Instead, a demilich's lair is housed with countless books, scrolls, ritual components, magical items, and artifacts. So the melee does not feel cheated or left out, a DM may include magical armor or weapons. The lich was not planning on using these, merely disenchanting them. Depending on their luck rolls for treasure, the lich might not have gotten around to destroying all of it yet.
If you plan to combat a demilich, it is HIGHLY recommended that you have 8 or more party members. Odds are that 3-4 of you will be captured and not be resurrect-able, so have enough extra party members to compensate for the loss of damage or healing. Most DMs will agree that the demilich, being HIGHLY intelligent, will see your party members as a much larger threat than a basic NPC you recruit from the nearby town. Cannonfodder has no benefit when facing a demilich. You'll only be tripping over the bodies as you chase around a flying skull.
A demilich is a very mobile creature. It keeps it distance, pelting the party with powerful channeled or area-of-effect spells until it drops to about half health. Upon being bloodied, and every subsequent time it is reduced to 50% health, the demilich's Soul Drain ability recharges, and it swoops in to make use of it. Devouring a soul contained within one of the gems allows the lich to recover up to a third of its maximum health. Soul Drain can be resisted... but not unless you have items that boost your saves.
In other words... if you don't have items that significantly boost your saves (5 or more) you will be UNABLE to kill the lich. Every time you reduce it to 50% or less, it will drain a soul, heal itself, and thereby reset the ability again in the future. Someone has to make the save in order to break the cycle.
At the DM's discretion, a demilich can START the encounter with 2-4 souls already captured. It can house (again at DM's discretion) anywhere from 8-12 souls total.
This creature is hard to find information on, and was originally created as a challenge creature for parties who were defeating deities with relative ease. With the newer versions of D&D, and the addition of a level "cap," this creature, in its original luster, was nearly erased from existence. Many watered-down and pushover version of this creature have been released in pre-made dungeons, and in online games. The true nature of the beast is on par, or even more dangerous, than a Tarrasque.
There are ways to gain access to a demilich's vast treasures without having to "kill" it. Dimensional rifts will occasionally work (at the DM's discretion). A wish is the most common form of avoiding combat if you are foolish enough to enter its lair and attract its attention. However... since a demilich is not 100% in this dimension, you must make a roll to complete the wish correctly, and remove the danger the lich poses. This is regardless of DM's discretion.
Because of their ability to travel across planes of existence, it is possible to find demilichs in any place rich in magic, magical experimentation, or magical knowledge. When found outside the human plane, demilichs do not often have a phylactery. It is stored on the creature's home-realm.
With their planeswalking comes access to spells, rituals, and abilities that characters and other creatures do not possess. If you want to up the ante and make this creature MORE powerful, you may have the DM create 1d4 worth of spells and assign them to the demilich as once-per-day, at-will spells. Spells must be reasonable, and be able to be resisted or saved.
The above picture was photoshopped by me. I combined several gems, a skull, and a twister I recolored; to give it the appearance of sand. The original, un-cropped image that I made also had 2 hands floating beside the skull. The entire image was incorporated into a demotivational poster titled "Demilich." The underlying text read:
"Next time we tell you not to touch anything... DON'T FREAKING TOUCH ANYTHING."