Taxes can really take a bite out of your estate. You worked hard, you saved some of what you made instead of spending it all, and from what’s left, Uncle Sam might just take nearly 40%.

Forty percent. Yeah, almost that much.

I’m not really talking about the estate tax here. Yes, the federal estate tax (call it “death tax” if you prefer) is a flat 40% rate. But it only applies if your estate is more than $13 million. Or if you are a married couple, if they handle it right, $26 million. With apologies to the few Senior Voice readers who might be over those amounts, I am assuming that is not you.

But if we’re not talking about the dreaded death tax, what are we talking about? Capital gains taxes are only about 15% for most people, and even that is wiped out when you die, so your heirs don’t have to worry about it.

No, I’m talking about the good old income tax.

Now please understand, most of what you inherit is not taxable income. If you inherit your parents’ home which is worth $400,000, you do not have $400,000 of taxable income. You don’t have any taxable income at all from that. But if you inherit your parent’s IRA (or other tax-deferred account) which is worth $400,000, then you do have $400,000 in taxable income.

That is because IRAs, and a lot of other kinds of accounts such as TSPs and 401(k)s, are “tax-deferred”. You don’t pay the taxes on that money when you earn it, the taxes are deferred until later, when you are retired. Which makes some sense from a financial standpoint, since you are probably earning a lot less in retirement than you were in your peak earning years, so that you pay less tax on that money.

But what happens when you die, with money left in that account? Well then, your heirs have to pay the income tax. They don’t have to pay it all at once, they can stretch it out over a number of years, but they do have to pay it.

And it used to be that those heirs could stretch out the payments over their entire life expectancies. But just a few years ago, Congress changed that so that most of the heirs who inherit that money will have to take it out within 10 years. If the amount is substantial, especially if that heir is still earning money themselves, that can rocket them into a really high tax bracket. And yes, the top income tax bracket is nearly 40% (if you want to be precise, it was 39.6% but was reduced to 37% under Trump. It may very possibly be raised back up in the next few years).

Is there anything you can do to avoid that tax being a burden for your heirs? Yes there is, at least for the charitably minded. It’s a neat little trick, and perfectly legal.

Most individual beneficiaries can stretch out the distributions from the inherited IRA. If it is a surviving spouse, he or she can stretch that out over their entire lifespan. With a few less common exceptions, other beneficiaries have to take the money out within 10 years. And as they take it out, they have to pay income tax on the withdrawals. But the one category of beneficiaries who never have to pay income tax, is charitable organizations. As long as they are tax-exempt charitable, educational or religious organizations, they can take all of that inherited IRA money without paying any tax.

Which means that if you leave that $400,000 IRA to Junior, he might only get $300,000 out of it. But if you leave it to a charitable organization (or make that plural, it doesn’t have to be just one) they get to keep, and use, the full $400,000.

This works with any kind of tax-deferred account, including traditional IRAs, SEPs, 401(k)s, 403(b)s, TSP, deferred comp, SBS, and more than a few others. And it works as long as the organization you are giving it to is what the IRS calls a 501(c)(3). Most charities, colleges, think-tanks, churches and ministries are in that category.

And you can do it directly on the beneficiary form for that retirement account. You don’t even have to pay a lawyer. Neat trick.

Kenneth Kirk is an Anchorage estate planning lawyer. Nothing in this article should be taken as legal advice for a specific situation; for specific advice you should consult a professional who can take all the facts into account. You know, Senior Voice is published by Older Persons Action Group, Inc., which is a 501(c)(3). Just saying.