Ruling on taking possession of haraam wealth by means of inheritance
Question

                My grandmother lied to the heirs, her husband's sons from his first wife who was deceased, and told them: the house and some pieces of land were put in my name by your father. My grandmother died and this inheritance passed to my father. My father died and the inheritance passed to us -- his sons. Is this inheritance halaal or haraam? We thought of returning it to its owners, the sons of our paternal uncle, but our paternal uncles have died. What should we do? Thank you.
Praise be to Allah.
    What your grandmother did -- may Allaah forgive her -- was 
    undoubtedly invalid, because she combined two grievous major sins: lying and 
    consuming people's wealth unlawfully. Allaah says (interpretation of the 
    meaning): 

    “And eat up not one another’s property unjustly (in any 
    illegal way, e.g. stealing, robbing, deceiving), nor give bribery to the 
    rulers (judges before presenting your cases) that you may knowingly eat up a 
    part of the property of others sinfully”

    [al-Baqarah 2:188] 

    “O you who believe! Eat not up your property among 
    yourselves unjustly except it be a trade amongst you, by mutual consent. And 
    do not kill yourselves (nor kill one another). Surely, Allaah is Most 
    Merciful to you”

    [al-Nisa’ 4:29]

    Moreover the fact that this happened a long time ago and the 
    original rightful owner has died does not alter the facts at all, and it 
    does not make this unlawful money permissible, either for the grandmother or 
    for any of her heirs. 

    The majority of the Hanafis, Maalikis, Shaafa'is and Hanbalis 
    are of the view, which is also the view favoured by Shaykh al-Islam Ibn 
    Taymiyah, that death does not make haraam wealth halaal; rather what must be 
    done is returning it to its owner if he is known; if he is not known, then 
    it must be given in charity on his behalf to the poor and needy. 

    Haashiyat Ibn ‘Aabideen (5/104);
    al-Majmoo’ (9/428); Ihya’ ‘Uloom al-Deen (2/210); al-Insaaf 
    (8/323); al-Qanoon al-Kubra (1/478). 

    This is the correct view that should be followed in order to 
    absolve yourself of any responsibility. 

    Ibn Rushd al-Jadd said: 

    As for inheritance, it does not make haraam wealth halaal. 
    This is the correct view which is in accordance with common sense. It was 
    narrated from some of those who came before that inheritance makes it 
    permissible for the heir, but that is not correct. 

    Al-Muqaddimmat al-Mumahhidaat, 
    (2/617). 

    Yahya ibn Ibraaheem al-Maaliki was asked about haraam wealth: 
    does inheritance make it permissible or not? He replied: It does not make 
    haraam wealth halaal according to the view of Maalik. End quote. Al-Mi’yaar 
    al-Mu’arrab, (6/47). 

    Al-Nawawi (may Allaah have mercy on him) said: 

    If a person inherits wealth and does not know from where the 
    deceased acquired it, was it from any halaal source or a haraam source? And 
    there is no sign, then it is halaal according to scholarly consensus. If he 
    knows that there is some haraam in it, but he is unsure of its extent, he 
    should take out the amount that is haraam according to his best guess. End 
    quote al-Majmoo’ (9/428) 

    Shaykh al-Islam Ibn Taymiyah (may Allaah have mercy on him) 
    was asked about a man who dealt with riba and left behind wealth and a son 
    who knew of his situation; does the wealth become halaal for the son by 
    means of inheritance, or not? 

    He replied: 

    The amount which the son knows is riba should be taken out. 
    It should either be returned to its owners if possible, otherwise it should 
    be given in charity. The Prophet (blessings and peace of Allaah be upon him) 
    stated that if wrongdoing involves money, the one who was wronged may ask 
    for it from the one who wronged him, and he did not say that the heirs (of 
    the one who was wronged) should ask for it. That is because heirs take over 
    his position in this world, so whatever can be recovered in this world 
    should go to the heirs, and what cannot be recovered in this world then the 
    one who was wronged will ask for it himself in the Hereafter. End quote from
    al-Fataawa al-Kubra (1/478). 

    Based on the above, the money must be given back to the 
    rightful heirs, as Allaah has enjoined, and it must be given back to them in 
    this form because the original heirs -- who are your paternal uncles, the 
    sons of the other wife -- are alive. Then after that you should look for who 
    inherited the share of each one of them. 

    Perhaps Allaah will forgive your grandmother when you restore 
    the rights in full to their owners, and ask them for forgiveness with regard 
    to anything you cannot restore. 

    And Allaah knows best.