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As a recipient of an inheritance - you do not need to claim it as income. Regardless of the value. Please see for reference IRS publication 525 page 34 (left column)- http://www.irs.gov/pub/irs-pdf/p525.pdf
Gifts and inheritances. Generally, property you receive as a gift, bequest, or inheritance is not included in your income. However, if property you receive this way later produces income such as interest, dividends, or rents, that income is taxable to you. If property is given to a trust and the income from it is paid, credited, or distributed to you, that income is also taxable to you. If the gift, bequest, or inheritance is the income from the property, that income is taxable to you.
However - the distribution from tax deferred accounts will be taxable. If you mother made payments into annuities with after-tax funds - these will be distributed tax free - but all earnings will be taxable.
Depending on your policy - you basically have three options:-- Lump-sum payout-- Full payout over the next five years-- Annuitize over your own lifetimeIf your mother already started the annuity payments - you must take payments at least on the same level.
Let me know if you need any help.