How to Distinguish Tangible from Intangible Assets in an Estate


Under a last will, a deceased disposes of both tangible personal property and intangible personal property. However, questions may arise in the context of administering an estate as to whether an item is classified as tangible personal property or intangible personal property of a deceased. This distinction is often important, because the distribution of an item of significant value can be directly affected by this determination.

In general, tangible personal property includes items such as jewelry, personal property, personal effects, heirlooms, and other physical items. Intangible property generally includes assets located in an account, funds, and items that are not physical. It is a common misconception that since money is physical, it is a tangible asset. Instead, courts have decided that money is an intangible asset. On the other hand, if a deceased person had a personal collection of coins or a personal collection of unusual coins identified by the deceased, these items could be considered tangible personal property. In general, however, monetary assets, regardless of their nature, are considered intangible.

A recent Appellate Division case dealt with the issue of whether stock certificates of a closely held company could be considered tangible assets. Despite the plaintiff’s attempt to classify the share certificates as tangible personal property, the court ultimately found that the items were intangible and, therefore, did not fall within the personal possession clause of the deceased’s last will and testament. This decision was in accordance with well-established law. Although the stock certificates themselves were physical, the document only represented the actual interest in the company and was not a manifestation of it.

Thus, when an estate is distributed, it is always important to pay close attention to how an executor classifies the items to be distributed. The classification of items as tangible or intangible assets can result in dramatically different distributions. Therefore, if questions arise, it is suggested that a party consult counsel regarding such an interpretation as soon as possible to avoid an inequitable result.

COPYRIGHT © 2022, STARK & STARKNational Law Review, Volume XII, Number 160


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