Understanding Estate Taxes
8. Leaving everything to your spouse (B)
Sue's estate of $10 million will be entitled to claim her $5 million exemption. But the federal estate tax on the remaining $5 million will be $1,750,000!
The problem with leaving everything to your spouse is that you waste the estate tax exemption of the spouse who dies first.
You see, everyone is entitled to an estate tax exemption. But when Bob left everything to Sue, he wasted his.