I am sorry for the loss of your mother-in-law. There are certainly can be some advantages to deeding property prior to one’s death, rather than waiting for that property to pass by will, however, there are also some significant cons and tax consequences, as well. One of these cons relates to capital gains and the potential negative tax consequence of completing this type of transfer before death. Generally, if property is passed on at a person’s death, the heir receives a step-up in basis (Fair market value at time of death) for capital gains tax purposes which likely eliminates or decreases the capital gains taxes that would be owed if the property is sold. However, since in your case, the property was transferred prior to death, the heir (presumably your wife) will not receive this step-up in basis and instead will pay capital gains at time of sale based on the original purchase basis of the property (NOT based on the fair market value at time of death).
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