@hannahcastellano15 sorry for your family's loss.
There is an exception for a terminal illness. See the "terminal illness" line in the link below. The income tax is still due; it's the penalty that is waived if the exception is met.
https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-exceptions-to-tax-o...
inherited 401ks follow the same rules as inherited IRAs - they are not subject to the 10% penalty upon distribution. if there is a decision to roll the inherited 401k to an IRA, be sure it's designated as an INHERITED IRA so that there is no 10% penalty on distributions.
