As you begin to work out how to disperse your estate both throughout your life and after yours away, a well-balanced estate plan is exceptionally useful. Estate planning, in part, helps ensure that you do not sacrifice more of your estate to various taxes than you have to. One of the essential things that you should take into account is the amount of value that an individual may give away through gifting, tax free, throughout one's lifetime or after.
The limit of how much a person can donate tax-free does change from time to time, and this exemption exists at the federal level rather than the state level. Those living in California may have trouble with additional state-level taxation. The way the system works is that individuals may give away a certain amount of money or property during their lifetime, and then upon their death the remaining "balance" of their lifetime exemption may be applied gifts left to others upon death. This is in addition to yearly exemptions of tax-free gifts.
Currently, the lifetime gift exemption is somewhere around $5.5 million per person, with a yearly cap on tax-free giving of $14,000. This means that you can give away up to $5.5 million throughout your lifetime without incurring estate or gift taxation. Each year, you may give away up to $14,000 to any number of individuals. You can use this advantage to spread your assets around and remove them from your personal estate to keep your taxable estate smaller.
If you are considering ways to maintain control of your assets in the face of pretty hefty taxation (like we face here in California), be sure to speak an attorney who can help guide you. Your giving plan is an important part of your overall estate plan, and requires careful consideration. Proper estate planning guidance helps to ensure that you don't miss out on benefits you deserve as you craft an estate plan that fits your needs and legacy.
Source: Findlaw, "Common Estate Planning Mistakes," accessed Sep. 29, 2017