I don't mean to sound rude, but it's clear you're not an artist. I would rather jimmy noname from missouri come up with fanfiction that he can sell based on my characters, or evil movie studio #346 making another generic movie based on my characters than my family to own them. The more stories the better (not on average, but one masterpiece that rises above is more important than a flood of mediocrity). I am an individual, I love my family, but my art is my art. It either dies or it should be free. The reason I own it now is so I can shape it while I'm alive and support myself/my family. They do not have the same stake you assume they should. Not every artist will think like me, but the very idea that there could be artists like me out there means you have to consider that art is something different than a company or an invention. It's a part of personality and perspective, that can't be inherited. It's either sold or remade by someone new.
Is it entitlement? Possibly. You argue the family is entitled to the intellectual property, but why? Am I less entitled to it than them?
Let's forget about me though.
Why should art be open to different interpretations? Because looking at something with a different perspective is intellectually rewarding and sometimes insightful to humanity. Stories are told in different ways based on the times and based on the person. Creating your own world is wonderful, but it's also derivative in the way you still despise. You won't be able to get around it, but at least you can make what's already there fresh and original. If you want to make a superhero story about the guy that always does the right thing just like Superman, Mr. Muscle Man(ORIGINAL CHARACTER DO NOT STEAL) is just not the same as Superman, no matter how you're going to write Mr. Muscle Man. Yet, you can change Superman in the public eye with a well done story. Maybe you didn't want to change the world, maybe you just wanted to tell a good story. Even then, it's impossible if the only people allowed to make Superman stories are approved by DC and the descendants of Siegel and Schuster (though I believe it's just DC, the S&S families just get credit and a cheque.)
That's the other thing. A company can own intellectual property. That's truly terrifying. Whereas a family might have respect for an ancestor's work, a company only measures financial worth. Companies that use public domain material might still be considered heartless, but they're not the only ones that can tell the story. That's what matters.
Public domain is for the benefit of everyone. It allows the cultural mainstays (especially now, when we're OBSESSED with intellectual property, it's on every t-shirt and lunchbox) to become more than just a singular voice. If art wasn't able to be subject to different interpretations, art would go nowhere.