Originally Posted by
MisterV
Situation 1: Does he have a will, giving it to his daughter?
To make it smooth, he should have a will, and let her know the situation and give her the safe's combination, assuming she can be trusted.
Upon his death she hires an attorney, probates the will and adminitster the estate with nonintervention powers; list the cash in the inventory of estate assets and at the end distribute it to herself as beneficiary.
There should be not federal estate tax due; as for a state one, it depends where the decedentl dies.
The cash would come to her tax free; I believe the estate has no legal obligation to notify the IRS of the source of the funds; the guy who won it should have paid taxes as he went along, and the IRS would want them paid IF they ever found out...