One further thought on this topic. I have seen in this post string that the estate can bear all of the tax burden and also that the beneficiaries bear all the tax burden, but does the IRS allow for a split of the tax burden? My rationale is that estates don't file state income taxes but individual beneficiaries do. I live in a state where the tax rate is a flat 4%. So if the upper tax bracket is both 37% for individuals and for estates, then the marginal tax bracket for individuals is really 39% (35+4). Thus, it seems there is a sweet spot whereby if the estate is large enough, if you reduce the size of the estate distribution so that you fall into the 32% individual tax bracket (32 + 4 =36% effective tax bracket), you will be at that "sweet spot" and any excess potential distribution can be retained by the estate and taxed there.
