There are potential taxes in Michigan, and the trustee has the duty to liquidate all or some of the assets to pay them. As I stated before, you need to seek counsel who can provide you counsel based on all of the facts and circumstances.
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There is no estate tax at the state level, but there may be taxes to be paid, such as income tax, etc. If the bonds are not in the trust (if they are in the individual's name), then they are probably not part of the trust estate and should not be liquidated by the trustee but divided among the proper beneficiaries. You need your own attorney.
I agree with my colleagues. There are no estate or inheritance taxes in Michigan. There may be income tax consequences, since bonds are usually taxable when they are redeemed. This is especially true if these were tax deferred investments.
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Although I agree with the others on the tax issue, if there were CD's in your mothers name a probate estate should have been opened for your mom unless your father or the children were the beneficiary of them. If your father was then what ever your mother wanted to do with the CDs is mute as she predeceased your dad. If the kids were then this should have been done in 2005. You may want to hire an attorney to flush this out.