I am a Michigan resident. My Dad passed away in California recently, and I stand to inherit his estate together with my two Californian siblings. Dad kept most of his money in California municipal bonds because of the dual (State and Federal) tax exemption on their dividends. The funds are currently in a trust that will be distributed to the inheritors. Should I seek to cash out those bonds while they're still within the trust, or should I take them distributed as California municipal bonds? I assume that dividends would be exempt from my Federal tax but not my Michigan tax. Or perhaps there's a third option that I haven't considered. Any advice would be appreciated.