A gift is a tax-free distribution of funds from one person to another. The 2013 Internal Revenue Service code allows you to give cash and/or property valued up to $14,000 to each of an unlimited number of recipients per year without tax consequences. A married couple can give up to $28,000 per year, per recipient.
Gifts made to recipients over time can help reduce a large estate, and the gifts are tax-free to recipients. The unlimited marital deduction permits gifts of any size to your spouse during life or at death without tax consequences.
More details can be found in IRS Publication 950, "Introduction to Estate and Gift Taxes,” at http://www.irs.gov/publications/p950/index.html.
A word of caution: Gift and transfer rules for Medicaid are much more restrictive than tax rules. The rules for Medicaid—which pays for 70% of all nursing home care—vary widely from state to state. If a nursing home stay is likely in the next five years, consult an elder-law expert before making any significant gifts.