Grandparents

You want the assets that you've spent a lifetime accumulating to pass to your heirs in the most efficient manner possible. Your concerns are first to maximize the available income of the surviving spouse, and then to minimize federal estate taxes. Assets passed to your children are subject to estate taxes at your death. Your children's assets, including any assets inherited from you, are also subject to estate taxes when passed to their children – your grandchildren.

This means that assets will be subject to estate taxes twice before your grandchildren receive them. You want to pass as much as possible directly to your grandchildren, exposing these assets to estate taxes only once.