@Mia85
Sorry for your loss.
Well, I just had a look back through your posts, and you've offered such thoughtful comments that I'm not sure I'm going to add anything much to what you are already thinking. But I appreciate your head might be reeling.
As you've said before, its about identifying your goals. You've said you are more interested in FI than necessarily RE. You've said you want to prioritise holidays and experiences with the children, and also the freedom and flexibility FI brings.
So. It may not be the best choice to totally pay off the mortgage if that wipes you out. You will probably want to use some of your money for experiences now.
In the light of a large financial change, you probably want to review in the round. What lifestyle do you really want to be really living right now? You might want to work part time, or locum/supply/consultant, as that can give more flexibility. You might want to RE, by putting money into e.g. ISAs, as you identified before this can allow you more flexibility at a younger age than other wrappers. Is this important? You seem to have an excellent handle on the different vehicles so can probably form a good plan once you have revisited your goals.
On the mortgage question. Investing in the stock market would usually beat a mortgage at current interest rates, over time. There is always the argument that you can invest rather than pay off the mortgage. Although endowment mortgages did not always end well. And arguably the stock market is over valued and a correction is not unlikely, though this may be only a short term issue. The past is not always a good guide to the future etc. But there is the psychological aspect of paying off a mortgage. In terms of mental freedom that might be important. This probably also depends on your thoughts around working and whether you might want to maintain eg a smaller monthly payment, which means less of a commitment so more flexibility of choice.
Remember this is not all or nothing. You could split between reducing the mortgage at the end of the fix, and loading up eg ISAs and having some great experiences. You said yourself the concept of being a FIRE-liter is a potentially useful one.
It can also be nice just to buy a nice thing with inheritance, so you look at it and remember the person. A painting, a piece of jewellery, an ornament. Something beautiful, longlasting and potentially meaningful. It can be a truly lovely thing to carry through life in memory of your aunt. In the scheme of money like this, a grand or two can be worth it.
Those are some thoughts. But first, take your time, take time with your DH to think about your new life plans and goals. It makes a difference to your OP where you felt too late to the party!