CD or Mutual Fund (or other?) for funds used in guardianship?

Friend of family had her grandmother slip into a stoke last year. The grandmother is totally handicap now and the granddaughter umed guardianship. Her property was sold and the money was put into a savings account - a fairly sizable amout of cash ( over $250k). When I discovered how low the intrest rate was I got a little mad at her. But what would be the best investment approach? She needs to keep some of the funds liquid for paying grandma's care bills and obviosly she can ume a heavy risk burdon with he cash. Some CDs look attractive at 5% but some mututal funs are out-performing that right now. Any suggestions?