According to Houston Financial Advisor Richard J. Alphonso , JD, CPA, M.S.T., and Tax Manager C. Randy Scott, the gift tax exclusion is one of many estate planning tools that can help you minimize estate tax. Under this exclusion, the first $10,000 given from one person to another, in any given year, is free of any estate or gift tax.

This offers substantial estate tax savings. For example, you and your spouse could give $20,000 ($10,000 from each of you) to each of your two children every year for 5 years, and reduce the size of your estate by $200,000.