In most cases no, there is no requirement to return a gift just because the one who made the gift subsequently died. Exceptions to this rule would be if someone demonstrated that your parents lacked the mental capacity to make a gift at the time the gift was made, if they showed your parents did not act of their own free will, if they showed the gift transfer was fraudulent, or if a creditor showed that such a transfer violated the fraudulent transfer rules which essentially try to prevent someone from giving away assets to avoid paying a creditor.
That being said, just because the gift does not have to be returned to the estate does not mean that the gift will not factor in to the estate's calculation of its estate taxes, if any. Depending on the size of the gift some or all of the gift s may impact the calculation of estate taxes. If your parents estate including the gifts was in excess of $1,000,000 tax or estate counsel should review your specific facts to ensure you don't run afoul of the tax man.
Very truly yours,
Ed Smeltzer
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