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Gifting assets during your lifetime can be a useful way of reducing the size of your estate for for inheritance tax purposes. There are a number of exemptions already in place for small financial gifts, for example, you can give up to £3,000 annually to anyone. Most gifts made during your lifetime to nonexempt beneficiaries, i.e. anyone other than your spouse, are potentially exempt transfers, meaning that provided you live seven years from the time the gift is made, it will not be taxable on your death. Particular care should be taken around gifting assets which contain a reservation, i.e. where the gifted asset is still enjoyed by the person who gifted it. This often occurs in relation to real estate transfers, for example, between a parent and a child. If a property is gifted and the person who made the gift continues to live in the property without paying market rent, for inheritance tax purposes the property is still treated as being owned by the person who made the gift.