Most of this post involves legal questions, not tax questions.
However, poster does ask:
Q. If the Inherited IRAs go to the contingent beneficiaries or estate, that would we welcomed as long as the sisters aren't taxed on the Inherited IRAs as a distribution or as ordinary income. Would they be?
A. Yes, either the estate will pay the income tax on ordinary income or the heirs that receive the distribution will pay the income tax. If somehow, the sisters are able to actually inherit the IRA, as a legal beneficiary (as opposed to taking a distribution from it thru the estate), then they will have 10 years to take distributions. So they could either spread the tax over 10 years or postpone taxation for up to 10 years.
