The Applicable Credit
As it stands, you're allowed to inherit or receive gifts of up to $675,000 over your lifetime before those gifts are taxed. That may sound like a lot, but if you consider that you'll inherit your spouse's estate when he or she dies, those numbers can add up quickly.
A decedent's estate could exhaust his surviving spouse's credit, and then it becomes part of her estate. That means that when she passes her estate on to their children, it'll be taxed again. By disclaiming her spousal right to inherit, that estate passes to the next generation tax-free (within their own exemption).
If there's another instrument in play -- for example, the next person in line to inherit is actually a trust -- the survivor can allow the bequest to pass directly into that trust, where it will begin drawing interest.