You may give up to $14,000 to as many individuals as you wish in any one year. Married couples can double that amount - for example, a married couple could give $28,000 to each of their three children in 2014, for a total of of $84,000. Most people choose to make cash gifts, or assets that are likely to appreciate in the future. Many of my clients gift into a grandchild's 529 college savings plan.
Many people mistakenly believe that such gifts are taxable to the recipient. That is not the case, because gifts do not qualify as income under Internal Revenue Code.
Bear in mind that you are not limited to the $14,000 cap if you pay for an individual's educational or health care expenses. However, you must pay the educational institution or medical provider directly.
The annual gift tax exclusion is different from the lifetime estate tax exemption. The lifetime estate tax exemption is currently $5.12 million but is scheduled to decrease to $1 million next year if Congress does not act.