Gifts and inheritances are NOT INCOME and are not subject to Federal income tax when received...California may have "special" rules, I don't know off the top of my head.
Federal Gift and Estate taxes apply to the giver only, not the givee.
I agree with the advice to pay off debt first if you have any. You are not likely to find a better rate of return from "safe" investments. I am mostly holding cash these days, and of course "investing" in old german auto parts
