Estate Taxes at First Grandparent's Death

In the example on GSTT Using Bequests, a taxable estate of $1,859,000 is needed to have $1,100,000 net of estate taxes to give to the grandchildren. The federal estate tax would be $41,000. It is assumed that the balance of the estate passes to the surviving spouse as a Marital Deduction.

In this example, each grandparent bequests $1,100,000 to the grandchildren at death. At the first grandparent's death, a taxable estate of $1,859,000 is needed for the $1,100,000 bequest with enough left to pay $41,000 of estate taxes, as no marital deduction is available for estate taxes paid. At the surviving grandparent's death, another $1,100,000 is given to the grandchildren. (At death, estate taxes are due even on the amounts used to pay estate taxes. Gifts prior to death only cause gift taxes on the gift itself.)