Q: I'm confused about the gift-tax exclusion. My accountant told me I can give away $11,000 a year, but my brother says the actual exclusion is $1 million. Who is right? N.S., Memphis, Tenn.
A: Actually, both are basically correct. The annual gift-tax exclusion allows you to give up to $11,000 a year to each recipient without paying any gift tax and without using up any of your $1 million lifetime gift-tax exemption. You can also take advantage of the separate $1 million exemption for sheltering lifetime transfers worth up to that amount from gift tax. But dipping into the $1 million gift-tax exemption erodes the tax shelter available to your estate. Tip: If your spouse joins in making annual gifts, you can give away double—up to $22,000 per year to each recipient—but you must generally file a gift-tax return.