Don't add your child's name to your house deed or sell it for $1 to avoid probate. You'll trigger capital gains taxes when they sell. Instead, use a revocable living trust so they inherit with a stepped-up basis and pay no taxes.
Do not give your house to a child. Do not quitclaim your house to a child. Do not add your child's name to the title and don't get cute and sell your house to your child for a dollar. For some reason, people think that's going to take care of all the problems. It doesn't. I've talked about this before, but for some reason, people still think it's a good idea. I understand you're trying to get around probate. You're trying to avoid Medicaid recovery. If you do gift it and 5 years passes, yes, you get around the Medicaid recovery, but there's another problem looming. Capital gains tax. If you bought that house for $250,000, you gift it to your child and now it's worth $450,000 and they try and sell it, they're going to be responsible for the capital gains tax on $200,000. What's the answer? Again, say it with me, revocable living trust. Put that house in a revocable living trust, leave it to your kids. When you die and they inherit it, they will inherit it tax-free. That's called getting a step-up in basis. And the same thing happens if you give it to them through a will, but with a trust, they avoid probate completely. So again, if you want to fight me, let me know in the comments or agree with me in the comments.
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