There is a little over one year left to gift up to $5M without a gift tax. If you have a large estate or if your parents have a large estate, you should pay attention.
Until the end of 2012, the estate tax exclusion (the amount you can die with without a tax) is $5M. Likewise, the lifetime gift tax exclusion (the amount you can gift during your lifetime without a tax) is $5M. In 2013, unless congress and the president do something, both of these exclusions will drop to $1M.
Now is the best time in your lifetime to make a gift to eliminate a potential estate tax for your family. If you have a $5M estate, you can gift $4M now and when the exclusions drop to $1M, your estate will avoid the estate tax. But if you wait until after 2012, it will be much more difficult and expensive to avoid the tax.
Also, gifts can be made to trusts to protect the gifted assets from lawsuits and divorce claims.
As one of my law school tax professors used to say – the only people who pay estate taxes are stupid rich people. Rich enough to be subject to the tax. Stupid enough not to plan around it.
It you or your parents have an estate value of more than $2M, you or they need to look into this.