Here's how to make sure it's clients-not the IRS-who get IRA windfalls.

Death and taxes cannot be avoided, but a big tax bill on inherited IRAs can. Of all the assets clients may inherit or leave to heirs, IRAs provide a unique benefit: the opportunity to continuing tax deferred investing. Over time, the tax advantage can dramatically increase the value of the inheritance-often for clients and their heirs.

That's the good news. The bad news is that the IRS rules for making the most of the tax advantages that come with inherited IRAs-finalized last summer-run about 45 pages long and are as dense with caveats as the Black Forest.

Ensuring clients know that real benefits can be had or lost with inherited IRAs and helping with decisions about them should be an integral part of your practice and client communications.

For one, clients need to know that cashing out an inherited IRA can be costly. The cost of taking a lump-sum distribution on an inherited IRA with a market value of $150,000, for instance, can cost beneficiaries between $37,000 and $58,000 in state and federal income taxes, depending on their tax bracket.

"What we do upfront is examine the client's needs and discuss what they're trying to accomplish. Then we'll present them with the most advantageous options," says Donna Miller, president of MillerMusmar, a planning and accounting firm with offices in Reston and Manassa, Va.

Three variables affect a beneficiary's choices:

1. From whom did the investor inherit the IRA?

2. How old was the IRA owner when he or she died?

3. What is the timeline the recipient has for making choices regarding transfer options?

Options For Spouses