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The holding period for inherited assets is always long-term. If the estate earned dividends and they were reinvested, the gain on those new shares only will be short term. Check that the basis is correct for the inherited shares. They take date-of-death value, but many brokerage house computers still list the deceased's original basis. And note that the gain will only pass through to the beneficiaries if the estate closes or makes distributions during its fiscal year.

I wouldn't lose sleep over it. When that 1099 comes to us, we have no idea when the bonds matured, just when they were cashed. Most likely the client doesn't know either. And if they matured years ago, even the IRS can't retrieve their tax return to determine what bracket they were in back then. All we can really do is report the interest when it's reported to the client.