Yes and no. You will not pay tax currently, but you do have to file a gift tax return (due 4/15 of the following year). The gift tax return informs the IRS you have reduced your life time limit, and if you still have a taxable estate when you die, the limit is reduced and the estate pays the tax. If your estate is under the lifetime limit, then there won't be tax. For example if your estate is 6,000,000 when you die and you previously gifted 500,000, then your lifetime limit becomes 4,500,000 ( 5,000,000 - 500,000) and your estate will be taxed on 1,500,000 (6,000,000 - 4,500,000). This assumes the lifetime limit is 5,000,000 when you die.
If your estate is 4,000,000 when you die, the taxable estate is zero (4,000,000 - 4,500,000).
Hope this helps.
