Giving a gift during life allows the donor to witness and enjoy the fruits of his or her generosity. In addition to financial penalties, criminal punishments may be imposed in certain cases. The consent is then applied to all gifts except gifts to one another made by each spouse during the calendar year. Wills and trusts are common ways in which individuals dispose of their wealth. Most estates don't owe tax, but it pays to be informed. Prior to the 1950s, a donor wishing to support a minor by setting up a trust in his or her benefit was not eligible to receive the annual exclusion if the trustee had discretion over distributions.

Prudent donors should take full advantage of the incentives that are available to them to reduce the size of their estates through the use of lifetime gifts. One of the most overlooked estate planning tools is lifetime giving. Gifts that are not more than the annual exclusion for the calendar year. For a more detailed discussion, see 2503c trusts for minors and their uses in estate planning in this section. Gift splitting applies only to gifts made to third parties, not gifts between spouses. Donors must have been married when the lifetime transfer was completed.

The lapse expiration unexercised of a general power of appointment also is treated as a gift to the persons who succeed to the property by virtue of the lapse. For example, if the donor retains possession of the property or the ability to revoke the gift, then an incomplete transfer occurs resulting in no gift. The donor, as the party responsible for paying the tax, must report the amount transferred. The law treated the gift to the minor as a gift of a future interest.