This is a great question, and the practice used to be commonplace among wealthy families shortly after the estate tax was enacted in 1916. In 1924, a gift tax was installed to close this loophole, but it was repealed a couple of years later.
Ultimately, the window of opportunity was sealed shut for good when the tax was reenacted in 1932. It has been in place since then, and it is unified with the estate tax, so the exclusion applies to your estate and sizable gifts that you give while you are living.
We are using the word “sizable” because there is an additional gift tax exclusion that allows you to give up to $15,000 to any number of people in a given year free of transfer taxes.
It is important to understand the fact that there is an unlimited marital estate tax deduction. This allows for tax-free transfers of any amount of property to your spouse while you are living or after you pass away, as long as you and your spouse are American citizens.