Because you've lived in the home the past several years, you will qualify for this exclusion. Installment sales are typically used when the sale creates a taxable event, and the taxpayer wants to defer the taxes as long as possible. Given your situation, an installment sale may be to your disadvantage. If your goal is to carry the paper to receive a monthly income, you'd be better off selling the home outright and carrying the mortgage for the buyer. This can be accomplished without an installment sale, and the mortgage can be for any length of time you agree upon.
Any amount given above that amount is subject to the gift and estate tax laws.
Because California is a community property state, when one spouse dies, the surviving spouse will receive all of the deceased spouse's property unless there is a will or trust that states otherwise. When the surviving spouse receives the assets, it increases the overall estate for that individual. Both spouses can use their exclusion provided the surviving spouse doesn't receive all of the deceased spouse's assets. The most common method of accomplishing this is the establishment of a trust. Estate taxes are a political hot button right now, and it looks as though we may see some relief in the near future.