Q: Validity of NY irrevocable trust if a grantor lacked sound mind

A: Absolutely NOT valid.

A: In New York, an irrevocable trust created by someone who lacked mental capacity at the time of signing can be challenged and potentially declared void, but the situation becomes more complex when dealing with a joint trust created by both spouses. The key issue is whether the grantor who allegedly lacked sound mind had the requisite mental capacity to understand the nature and consequences of creating the trust, including what assets were being placed in it and who would benefit. If one spouse truly lacked capacity, their participation in creating the trust could be invalidated.

However, the validity of the entire trust depends on how it was structured and whether it can be severed. If the trust was designed so that each spouse's contributions and interests are clearly separate and divisible, a court might invalidate only the portion attributable to the incapacitated spouse while preserving the valid portions created by the mentally competent spouse. Courts will examine whether the trust documents allow for such division and whether the trust can still function with only one grantor's contributions.

To challenge the trust based on lack of capacity, you would need strong evidence such as medical records, testimony from treating physicians, or documentation showing the person's mental state around the time of signing. The burden of proof typically falls on whoever is challenging the trust to demonstrate incapacity. Keep in mind that New York courts apply a relatively low threshold for capacity to create a trust - the person needs only a basic understanding of their assets and the trust's purpose, which is less stringent than testamentary capacity required for wills.