But in your case the death was only 2014, so I don't know how that will work out.  

I did not word my answer very well, but the normal way a trust works is that the beneficiary is the settlor until the settlor's death, then the trust must pass to another person within 21 years of a life in being. 

It is less of a life or death situation if you can purchase a home for 100k compared to dropping your life savings into an expensive property when you are on the first deal, which is essentially a test run.

Even if there is never a problem with the property there can be problems from death, illness, divorce, law suits from other parties, unemployment, credit issues for refinancing...John Corey

Is your MIL on her death bed, that you say "about to inherit"?

The part about 1031 exchanges and "step up" in basis upon death is correct.

Death, incapacitation, spouses, and children are others.And, yes, you will disagree on the smallest issues.

You inherit it upon their death.

This is permitted because the value of the property is included in the estate computation for estate tax purposes, so it's cost basis is therefore stepped up to the fair market value at the date of death.

They may just have some sort of interest that kicks in upon the death of someone else.