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What you should know: By converting tax-deferred accounts (like traditional IRAs) to a Roth IRA, your heirs avoid paying taxes on the inherited funds and bypass the complexities of IRD (Income in Respect of a Decedent) deductions if estate taxes apply. While the conversion reduces the estate size due to the taxes paid upfront, spreading the conversions over multiple years using strategies like "filling up the brackets" can minimize the overall tax burden too.

Potential downsides of this strategy can also include higher Medicare premiums (IRMAA), reduced itemized deductions, impacts on ACA subsidies, and other tax credit issues due to increased income. However, with careful tax planning, a Roth conversion can be a highly effective strategy to leave a simplified, tax-free inheritance for beneficiaries.