If you give someone money or property during your life, you may be subject to federal gift tax. The money and property you own when you die (your estate) may be subject to federal estate tax. The purpose of this web page is to give you a general understanding of when these taxes apply and when they do not. It explains how much money or property you can give away during your lifetime or leave to your heirs at your death before any tax will be owed.
The annual exclusion for gifts is raised to $12,000 beginning in 2006
Source for Post: California Estate and Business Law Blog
(BTW, the California Estate and Business Law Blog is a great blog. Check it out at the link above).