Praise be to Allah, the Lord of the Worlds; and may His blessings and peace be upon our Prophet Muhammad and upon all his Family and Companions.
Haram money (wealth) is not suitable for heirs of a dead person after his death. Ibn Rushd (the grandfather) said: 'Inheritance does not make Haram money pure. This is what must be taken into account as being true.'
Therefore, if all the money is Haram, as stated in the question, then this money should be given away for the general benefit of Muslims, and other charitable work, like mosques, religious schools, poor people, destitute persons and so on.
It is not permissible for the heirs to benefit from anything from this wealth, whether it is furniture, a car or other, unless these heirs are obliged to benefit from it. For instance if they have no other means of provision, they can benefit from it, because necessity makes what is forbidden permissible. However, necessity has its criteria. It is not permissible to take something for comfort and luxury, and complementary things.
We consider that what is mentioned in this Fatwa is the preferred Fiqh opinion. However, some scholars state that the heirs are permitted to inherit the dead person, and that the sin of collecting Haram earnings is only on the dead person.
This opinion is not supported by evidence. So, we do not think that one should follow it.
Anyway, whoever wants to abide by this latter opinion should know that the inheritance is to be divided amongst the heirs as follows:
One eighth of the inheritance is dedicated to the wife. Allah Says (interpretation of meaning): {…their (your wives) share is a fourth if you leave no child; but if you leave a child, they get an eighth of that which you leave after payment of legacies that you may have bequeathed or debts….}[4:12].
Half of it (four parts out of eight) is dedicated to the daughter.
Allah Says (interpretation of meaning): {…if only one, her share is half….}[4:11].
The rest, which is three parts out of eight, will be allocated to the Asabah (the blood relatives from father's side who inherit after those who have their fixed shares in inheritance) if any, like the cousin and so on. If the dead has no relatives, then it will be devoted to the daughter.
Of course, the above division of inheritance is in the instance of a dead having no heirs, other than what is mentioned in the question: the wife and his daughter.
It is for this reason that our view is that in inheritance the case should be taken to Islamic courts if any, as they are better positioned in calculating the debts and giving it away.
Then they (courts) will dispose of the will (if there is any), which is no more than a third and after that they will count the number of heirs and put everyone in his proper place Islamicly speaking.
In the case of the lack of Islamic courts, then our advice is to refer to Islamic centers to carry out what should be done.
Allah knows best.