death proceeds

What is the name of your state? ILL

My mother-in-law passed away last July.
]My wife and I recieved $31,000 from her mothers retirement fund, insurance policy and an annuity. Is there anything we can do with this money to avoid paying taxes on it at this time, IRA? educational fund? etc?

The insurance policy is not taxable.
The IRA is taxable to your wife, but she gets an estate tax deduction equal to the portion of the estate tax attributable to the IRA. She can probably roll it over into her own IRA, depending on whether Mom was taking money out, etc.
The annuity is taxable, but can likely be rolled into an IRA.