FAQ:

Can I avoid estate taxes by giving away my assets now?

Gifting can be an effective way to avoid future estate taxes, with certain limitations. Federal tax laws allow you to give $12,000 per year (subject to adjustments for inflation) to an unlimited number of people without creating any gift or estate tax problems. A husband and wife may jointly gift $22,000 per year, per recipient. Larger gift are subject to gift taxes. Annual gifts that you make in excess of $12,000 per person will not immediately be taxed. Instead, such gifts will reduce your applicable exclusion amount (2 million in 2006) available at your death. You may give a total of $1 million in gifts to all individuals during your lifetime. A husband and wife may give $2 million.

Gifts are valued for tax purposes at the time the gifts are made. Therefore, future appreciation in the value of the gifted property will not be part of your estate. You may also give unlimited gifts to qualified charities during your lifetime or at death without gift or estate tax consequences.

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