If you decide you want to make lifetime gifts to your kids, what should you give away? Here’s one recommended sequence.

1. Life insurance policy. If you die owning an insurance policy, payable to someone besides your spouse, the proceeds will be included in your taxable estate. Even if the proceeds go to your spouse, they’ll be in her taxable estate.

Instead, give the policy to your grown children or to a trust. The way insurance policies are valued, you’ll probably owe little or no gift tax. Three years after the transfer, the policy will be excluded from your estate.

What if your policy has substantial cash value so giving it away would generate estate tax? Borrow as much as you can from the policy, reducing its value, before giving it away.

2. Discountable gifts. Interests in real estate or in a closely-held business may be eligible for valuation discounts.

3. Cash. There will be no valuation questions or deferred tax consequences with cash gifts. Sometimes, simpler is better.

4. Appreciated securities. Assets given away keep their basis so the recipients will owe capital gains tax if they sell. However, that tax likely won’t be punishing.

Assets where appreciation has been modest may be good to give away. The same is true for assets–such as a family beach house–that the recipients aren’t likely to sell.