As a result to tax law changes approved by Congress in 2001, the estate tax will gradually decline until 2010, when it is scheduled to disappear entirely. But it will stage a reappearance in 2011 unless Congress makes permanent the repeal. This creates an estate-planning conundrum.

Anyone with a sizeable estate is most likely trying to provide for heirs to the maximum extent possible, while paying the least amount in taxes. The question is, should you give away assets now, or bequeath them at your death? The answer depends on many factors, but giving away assets during your lifetime could potentially make sense for several reasons.

One thing to keep in mind is that your estate can’t be taxed on assets it doesn’t have. Therefore, one of the best ways to reduce estate taxes is to reduce your estate’s size. Because the laws are complex, it’s important to consult your tax advisor when considering these techniques.

Give away depressed stocks. If your cost basis is higher than your stocks’ current value, you might sell the stock to take advantage of the tax loss. But if the stocks have fallen to the levels at which you paid for them, it may make sense to transfer the beleaguered stocks to beneficiaries, particularly if you believe the stocks will rebound.

Pay education and medical costs. You can shrink your estate by paying medical or educational costs for anyone. This is not considered a taxable gift. Your check must be made payable directly to the medical or educational intuition rather than the individual incurring costs.

Maximize the annual exclusion. In 2003, you can give $11,000 to each of an unlimited number of recipients without having to pay gift taxes. It never figures into the circulation of gift and estate taxes, as is the case for gifts in excess of this amount since the federal gift tax is cumulative.

Give money to charity. You can give to charity free of the federal gift tax. If you give it away while alive, you get the added benefit of a tax reduction for income tax purposes, but only if you give a gift of the present interest. A gift of a partial interest may qualify if the donor sets up one of several types of charitable trusts.

Of course, in 2010 this advantage disappears – but only in that year. While it’s said that death and taxes are two certainties, the timing of the former can seldom be predicted with great accuracy. Your tax advisory, working in conjunction with your financial advisor, can help you determine the pros and cons of giving now versus later, mindful of your particular circumstances.