I'm not that familiar with REITS, so for the benefit of the rest of us, can you help us understand how something like this could happen. Was this a REIT mutual fund that trades in shares, or something more complex? Real estate has done well over the past seven years, so how could they be completely unable to fund your refund request? What happened to the underlying real estate assets being held by the REIT? And why would they able able to refund the money if you were dead, but not alive? It seems like there must be more to the story here, or everyone would be suing them.
Many financial products have 'death put' features whereby the estate is able to redeem the value of the investment without penalty upon death of the original account holder. It makes people more willing to purchase certain investments, while at the same time not forcing them to liquidate holdings to pay estate taxes and distribute money to heirs and settle the estate's bills within 9 months of death.
As far as the private REIT the OP refers to...there are 'private placement' REITs that are offered to investors who state that they meet certain criteria (used to be either 250k in income or $100k or some other level in assets). They are structured such that your money is tied up by buying property for a number of years. Most claim to have an exit strategy at some number of years down the road.
Some, as the OP found out, may simply be a little liberal in their assumptions in the marketing brochures.
I actually participated in such a private placement about 6 years ago with a company called AEI. They've put together perhaps 20 or so such private placement funds over the past 15-20 years. The ones started in the 90s have done phenominally well. I Bought 500 shares at a NAV of $10/share. In about 2007. My AEI fund's performance: not-so-phenominally well.
Current quarterly reports indicate NAV is about $7.50 or so a share. Still pays a quarterly dividend that is about $.50/year, or about 5% yield from initial investment.
I did it as a way to add a small amount of diversification to my portfolio - didn't necessarily have huge hopes or a lot riding on it. Figured "what the hell? Why not? It's a small % of my portfolio."
In the process, looking at the quarterly reports, I see how the managing partners make a killing on the overall deal, while the rest of the fund (the general partners, aka schleps like me) don't quite come out so sweet smelling. The general partners put up a relatively small amount of capital, and get something like the first 2% of all revenue generated by the partnership - essentially making an obscene % return off of their initial investment, while the rest of us barely make a respectable return, and hope the property values rise in line with inflation.
Would I do it again if the property market were right? Perhaps.....