Pure cash is not taxed to the recipient as income. Maybe once the 401k or IRA or whatever is converted to cash, the estate could be taxed. As you said, if you don’t want the asset, turn it down but you don’t HAVE to take it and be taxed on it. And I don’t see why it would be taxed as income if the estate pays the tax on it before distribution (cash).
My lucky kids won’t have this problem unless they leave the 401k as a 401k. They can withdraw it and have the estate pay any taxes, and that might be the best choice (it’s not terribly large, and I’m planning to spend some of it).
But the Picassos and Ming Vases? Oh, might cause big taxes.