If the money was actually received prior to death, it should be reported on the decedent's final income tax return.
If the money was received after death (but the decedent had an established right to receive the money prior to death), then it is income in respect of a decedent and is reported on the return of the individual(s) or entity that received it. If the estate received the money, then it is reported on Form 1041.
Income received on or before the date of death has to be reported on the final Form 1040 personal tax return for the deceased for the year of death. Only income received after death goes on the Form 1041 tax return for the estate.
You should take a look at IRS Publication 559, "Survivors, Executors and Administrators."
If the money was actually received prior to death, it should be reported on the decedent's final income tax return.
If the money was received after death (but the decedent had an established right to receive the money prior to death), then it is income in respect of a decedent and is reported on the return of the individual(s) or entity that received it. If the estate received the money, then it is reported on Form 1041.