Designate your spouse as the beneficiary. Most states require the surviving spouse to be the designated beneficiary unless a signed waiver is provided. Some couples name a family trust in lieu of the surviving spouse, limiting the options available only to a spouse. A spouse is allowed to inherit the IRA as her own and is exempt from estate transfer taxes.
Name a charity as the beneficiary if you do not have a spouse who can inherit the IRA as her own. While the value of the IRA will be included in the estate value, the estate will also get a deduction for the charitable donation, creating a wash for tax purposes.
Gift assets in your estate while alive to reduce your estate below the federal estate tax exemption level. The transfer tax was repealed for 2010, but is reinstated at $1 million starting in 2011. Estates over the federal exemption have a 55 percent tax rate applied to the estate value over and above the exempt amount. Speak with a tax adviser regarding what you can do to lower your estate value.
Purchase a life insurance policy that covers the anticipated amount of estate taxes. While this won't avoid the taxes, it will preserve the value of the estate to your beneficiaries. Use distributions from the IRA or other savings to fund the life insurance policy.