Individuals may give away a certain amount of property every year without gift taxation, and without the gift counting against the lifetime gift tax exclusion equivalent amount. Reducing estate property over time through the use of the annual gift tax exclusion ($13,000 in 2010) is a common estate planning strategy.

As of 2010, an individual can give away up to $13,000 to as many people as he or she wishes. Married couples can double the gift, to $26,000 per donee. So, for example, a couple that wants to reduce its estate by gradually transferring property to their three children and two grandchildren can, if they wish, give away up to $130,000 (i.e., 5 x $26,000) per year under the annual gift tax exclusion.

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