Gift Taxes work in conjunction with the Estate Tax. Essentially, the government makes little distinction for gifts made during ones life (gift tax) and gifts made after ones life (estate tax).
Although Gift Taxes are placed on gifts given away to any person while you are still living, one may still give up to $13,000 as of January 2009 in cash or assets to an unlimited number of people each year without incurring Gift Tax liability. Married couples can give as a couple $26,000 per year to as many people as they want.
But remember, if someone (or a couple jointly) gives more than the limit annually, the excess is applied toward their lifetime gift-tax exclusion, which reduces their estate tax credit at death. Moreover, if at any point the gifts they gave you during their life exceed this unified credit then they must pay a gift tax on the excess amounts over the credit.
As an aside, any gift transferred between spouses (where both are US citizens) of any size is 100% Gift Tax-Free. This fact may make it tempting to transfer assets between spouses but must be analyzed in conjunction with an estate plan and a professional estate planning attorney. This simple gift may result in your family paying a tremendous amount of unnecessary gift/estate taxes.
I would be more than happy to look at your situation and determine the most effective way to help your family transfer their assets. Contact me for a free consultation at 978-725-9083.