We live in Connecticut, and we’re thinking of transferring the title of our house say, now, to our son and daughter, both of whom are married.
We’d still pay the taxes and upkeep, etc., but when we croak or totter off to an old folks home, the transition for them would be smooth, and we hope without excessive taxes. Is this a cost-effective route to travel?
If not, what’s a better way?
Depends on the size of your total estate. The exclusion amount for estates has been climbing steadily in recent years (I don’t remember what it is right now, but I think it’s around $1,500,000).
I am neither an accountant nor an estate lawyer. If you think your overall estate is at all substantial, then the best thing you could do is engage a professional. My parents put everything into a living trust and avoided any probate at all when Dad died.
A lawyer to plan this stuff will run you a few bux, but I think it’s well worth it. Your survivors will thank you for it if you do it right.
By helicopter. 
If you simply leave your home to your children upon your death, they receive a stepped-up cost basis of the home at the time of your death, rather than the value today.
There was an article in today’s Plain Dealer about this very topic, but I can find no link. The questioner said their sister had a revocable living trust, and proceeds from the sale of her house were shared by her five siblings. There was no capital gains tax because they automatically received a “stepped-up” basis for the inheirited house. This was held up as an example of doing things right…because the title was held in her revocable living trust, there were no probate court cost or delays The heirs sold the house soon after her death “for a price that was about the same as its automatic ‘stepped-up basis’ market valueon the day she died. Therefore, you have no profit difference between your stepped-up basis and the net sales price so no tax is due on the sale. The heirs get to enjoy their tax-free cash thanks to the stepped-up basis rule. More details available from your tax advisor”
Since everything I just typed is Greek to me, I hope it helps you. The columnist was Robert J. Bruss, www.bobbruss.com
Thanks very much, kittenblue and everyone else who contributed. You’ve put me on the right track.
And you, especially, Johnny L.A. Who’d a thought?