William Keough was among the hostages held captive in Iran between 1979 and 1981. He survived the ordeal but died in 1985. William’s wife, Katherine, died in 2004. Her will left her residuary estate to her stepson, Steven, who was William’s son from an earlier marriage.

In 2015, Congress enacted the Justice for United States Victims of State Sponsored Terrorism Act. Under the Act, Katherine was entitled to $600,000 as the spouse of a hostage. If a person entitled to compensation had died when the Act took effect, the money was paid to the estate’s personal representative.

When Katherine died, her sole heir under the intestacy laws was her brother, Fred Schwarz. He died intestate in 2018. In 2019 Fred’s cousin, Eleanor, filed a lawsuit claiming the $600,000 should pass to Fred’s estate. She was the administrator of his estate. The executrix of Katherine’s estate argued that it should pass under the residuary clause of her will.

The Appellate Division of the Supreme Court of New York held for Fred’s estate. Will provisions can only control the disposition of property that the decedent owns at death. “We are particularly persuaded by the decision in Shaw Family Archives Ltd., which involved a dispute over ownership interest in Marilyn Monroe’s right of publicity after her death. The court determined that New York law did not permit a testator to dispose of the will of property that she did not own at the time of her death,” the Court wrote. As Katherine could not have known of the possibility of the future payment, her will is ineffective as to it, and the $600,000 must pass by intestacy to Fred’s estate.

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