Definition from Nolo’s Plain-English Law Dictionary
A federal tax imposed on large amounts of money given or left to a grandchild or great-grandchild. Its purpose is to keep families from avoiding the estate tax that would be due if the oldest generation left property to their children, who then left it to their children (the original giver's grandchildren). Currently, the exempt amount is $3.5 million, so this tax applies only to people wealthy enough to transfer more than that to their grandchildren. It is imposed in addition to any estate tax due.