# How to leave your kids a tax-free inheritance > A reader wants the IRS to get none of what they pass on, and three advisers lay out what actually works. - Title: How to leave your kids a tax-free inheritance · Kiplinger - Summary: A reader wants the IRS to get none of what they pass on, and three advisers lay out what actually works. You can't hand your kids a perfectly tax-free… - Keywords: inheritance, roth conversion, estate planning, rmds, taxes, leave, kids, tax-free, Kiplinger - Source: Kiplinger — https://kiplinger.com/retirement/inheritance/shielding-your-heirs-the-expert-guide-to-a-tax-free-inheritance - Published: 2026-09-14T12:30:00+00:00 - Read time: 3 min - Topics: inheritance, roth conversion, estate planning, rmds, taxes ## The question on the table A reader asks how to put RMDs and idle cash back to work so their adult kids inherit money the IRS can't touch. Trillions are about to change hands, and most families have no plan for it. > How can I put my RMDs and cash savings back to work so I can leave a tax-free inheritance for my adult kids? ## Fully tax-free is a stretch Zeroing out the tax bill on an inheritance is hard to pull off. What you can do is stack several strategies that shrink it a lot. ## A traditional IRA is a trap Adult children who inherit one have 10 years to empty it, and they usually do it during their top earning years. That stacks withdrawals on top of an already big salary. ## The bracket math is brutal Eric Croak of Croak Capital points out the 32% bracket starts at $201,775 for a single filer. A child near that line pays a premium on every inherited dollar. > This seems like an unappealing tax consequence, especially during their highest earning years. ## Convert to a Roth You can do Roth conversions even while you're taking RMDs. Heirs still face the 10-year rule, but the rules inside those 10 years are far kinder. ## Why the Roth wins No distributions are mandatory during the 10 years, so heirs can time withdrawals around their own income. And every distribution comes out tax-free. > No distributions are mandatory during those 10 years. ## Get the order right Take the year's RMD first, because an RMD itself can't be converted. Only then convert additional pre-tax savings and pay the tax now. > First, take the RMD for the year since an RMD itself cannot be converted. ## Turn RMDs into a death benefit Another use for forced withdrawals: buy a permanent life policy with your kids as beneficiaries. The RMD is taxed, but the death benefit generally reaches them income-tax-free. > The after-tax dollars can purchase a death benefit that will be generally income-tax-free to the beneficiary. ## Only if you're insurable Croak is blunt that this strategy works only if you can get coverage at a reasonable cost. Poor health or a late start can make the premiums not worth it. > Makes sense only if you are insurable at a reasonable cost. ## Park the rest in a brokerage Cash beyond the premiums belongs in a taxable brokerage account, not savings. Appreciated stock gets a stepped-up basis at death, while interest on cash is taxed at your top rate right now. ## Gift while you're alive The 2026 annual gift tax exclusion is $19,000 per recipient, or $38,000 for a couple. Before you write the check, ask if they need it now, if you can afford it, and whether every heir gets the same. ## Don't convert yourself broke A large conversion can push you into a painful bracket or into IRMAA territory, where Medicare premiums spike. Your bracket and your children's should drive the math together. > Your children's tax brackets should drive a lot of the math. ## When converting is wrong Will Allen of Sentara Capital says converting at 24% beats a $600,000 IRA draining at 32% for a 55-year-old. But if your kids will empty it at 12% or 22%, paying 24% now is a loss. > Converting at 24% now to avoid that is a wise move. ## Split heirs by bracket If you only convert part of the IRA, stop dividing everything equally. Send the Roth and taxable accounts to the high earner and the traditional IRA to the child in the lowest bracket. > Split the beneficiary designations by bracket instead of leaving everything equally. ## Never leave an HSA Jordan Smyth of Glassy Mountain Advisors warns the triple tax advantage dies with you. A non-spouse heir owes tax on the entire balance in year one, so spend it down and leave a Roth instead. > Don't leave an HSA to your children. ## Income tax isn't the whole bill These moves handle income tax, not everything else. State inheritance taxes and federal estate tax can still land depending on your state and the size of the estate. ## Key takeaway You can't hand your kids a perfectly tax-free inheritance, but choosing which account goes to which child, converting to Roth at the right bracket, and spending down the HSA gets you close.