The beneficiary is the equitable owner of the property, so I don't see a problem putting the income and expenses on her 1040.  I doubt the deed is in the name of the estate; who would have signed and recorded a new deed?  More likely, the mortgage company did an address change on its bills.  What SSN and EIN are they using to report the interest paid?  For that matter, the mortgage is probably not "in the name of" the Estate.  The beneficiary may not have good credit, but the Estate's has to be worse.

Are there other estate assets?  Has a probate been opened and/or closed?  Who would sign the 1041 if you wanted to file one?