The simple answer has 2 parts.
Each individual has an “annual exclusion” that allows them to give $14,000 per year to any number of individuals, without paying any gift tax. That means a wealth grandmother can give her 3 kids $14,000 each and each of her 7 grandchildren $14,000 each. The grandmother could give $140,000 (or more), each year, with no IRS reporting requirements.
Keeping it simple: Annual Exclusion = $14,000 (2016)
The issue becomes for gifts above $14,000. Gifts above $14,000 begin to apply to your “lifetime exclusion”. In 2016 the lifetime exclusion is $5,450,000. That is a large amount of money and does not apply to most people. However, if you make a gift above $14,000, you must report to the IRS using a gift tax return when you made the gift and the amount of the gift so it can be deducted from your lifetime exclusion. I have yet to meet anyone who enjoys reporting additional information to the IRS. By keeping gifts to $14,000 or less and giving to multiple individuals, you avoid those reporting requirements.
Keeping it simple: Lifetime Exclusion = $5,450,000 (2016)