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This is a complicated question, and only a general response is possible without knowing more information.
For Federal tax purposes, if the person dies in 2009 the first $3,500,000 of an estate is not taxable. If they die in 2010, there is no federal tax. However starting in 2011 the tax will kick back in and only the first $1,000,000 will be sheltered unless Congress acts in the meantime.
Note that lifetime gifts of more than $10,000 a year to one person are taxable, and the total of lifetime gifts are added back into the value of the estate at death to figure out taxes. The point of this is to keep people from avoiding tax by giving away their property before they die. Lifetime gifts of more than $1,000,000 will incur tax during life.
Any money given to or left at death to a surviving spouse (husband or wife) is not taxable for federal purposes.
NOTE: All this is only Federal gift and estate taxes. The state in which the person lives when they die will have its own gift and estate tax laws, which vary quite a bit from state to state.
There are many possible strategies to reduce taxes on very large estates. However, these are complex and more information would be needed.
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