All perfect praise be to Allah, The Lord of the Worlds. I testify that none is worthy of worship except Allah and that Muhammad is His slave and messenger.
There is nothing wrong in residing with your father and availing yourself of the water, electricity, and other utilities.
As long as your work is permissible under Sharee'ah, then your income is lawful and your grandfather’s gift has no effect on (the permissibility of) your work or on anything else. If he had committed an act of injustice, he bears its sin, and we ask Allah, The Exalted, to forgive him.
Allah Knows best.