No I do not think that the children of convicted embezzlers should have to repay the victims. It was not their choice to commit the crime. They are not responsible for the crime and should not be held responsible for some one's mistakes especially their parents. If they did that would be nice though.
No child should be held guilty for his parents illegal deeds. Unless it is proven and administered by court convicted embezzlers families are not guilty. On top the criminals` families assets and properties are seized to repay the victims. Madoff`s son and family suffered a lot during the case and the consequent publicity and bad reputation.
If anyone's wealth has come from embezzled money which was passed on to them, there should be legal means of recovering those funds to repay the victims. However, if the child of an embezzler has benefited, quite possibly unknowingly and innocently, from criminal gains in the past, if their current wealth is not legally found to be derived from criminally gained funds, they should not have to repay the victims. Two wrongs do not make a right.
The children of criminals should not be held responsible for their parents actions. Some children may be innocent of the the actions of there parents. Lastly, if you make the children of embezzlers pay, you cannot overlook all the other crimes people with children may commit where victims will have their hands out.