After Augusta's father had refused to countenance a divorce, and with Augusta showing clear signs of proving her husband right in the matter of behavior with men of lower rank, Catherine found it necessary to make arrangements for her removal from the palace. She gave Augusta the use of one of her Imperial estates, Lohde castle, in Lohde (now Koluvere) in Kullamaa Parish to the south-west of Tallinn, Estonia. Augusta was put in the custody of Wilhelm von Pohlmann (9 April 1727 – 22 January 1796), a former hunt-master. Augusta quickly began a sexual relationship with her custodian, and soon became pregnant by him.
On 27 September 1788, aged 23, Augusta went into premature labour with a stillborn child, followed by hemorrhaging. Pohlmann refused to send for a doctor or any other medical help, fearful that his illegitimate relationship to her would be exposed. Augusta died of blood loss. She was hurriedly buried in an unmarked grave in the church at Koluvere. Brief letters were then written to the Empress Catherine and to Augusta's father in Brunswick, blandly announcing her death and giving the cause as the breaking of a blood vessel. Sightings of Augusta (or her ghost) were reported for several years in the vicinity of Lohde castle, which suggests some local belief of scandal, tragedy or foul play, but no sighting proved to be true. The facts of her death only came to light many years later, when her eldest son had the matter investigated and her body was exhumed.