@mandb,
You should get professional advice from an accountant and/or an attorney to get a definitive answer.
Assuming you are in the U.S., if the value of your mother's estate did not exceed the estate tax exemption (5.34 million for 2014 and 5.25 million for 2013), it's unlikely there would be any tax consequences for your sister. Despite your mother's intentions, since your sister got the deed to the house before her mother's death it seems like she may actually be under no legal obligation to distribute the proceeds of the sale to anyone else but if she did, there would also be no tax consequences unless the value of her estate exceeds the federal estate tax exemption (which could change). However, there may also be state tax laws and other issues that need to be considered so you all should really get professional advice from an accountant and/or lawyer with expertise in tax issues and estate planning.