I'd really like to see you confirm your country, if it's not US, I'll be happy to delete my response, and re-enter as a separate question.

littleadv is correct in his response, no surprise there. But, given that information, there are consequences you should be aware of.

Gifts to any non-spouse are a non-issue up to $14000/yr per person. Not enough to gift a house. You would need to tap your lifetime gift exclusion, which in 2016 is $5.45 million. More than enough to give your house away with no tax consequence. There's a form 709 that you need to file. It's just a way to track your generosity over the years, and tax you once you're above this level.

That was the easy part. The tough part comes later. Gifts' tax basis is not adjusted. In other words, you die and leave the kids a $1M house, they now have a basis of $1M and can sell with no cap gain or keep it, but pay only the gain from sale above $1M. When you gift your $1M house, you may avoid the gift tax, but your kids now have your basis. It's very possible you bought that house for $250K, never tracked any updates, and the kids will have that $250K basis for their eventual sale, and potential tax due on the $750K "gain."

On a personal note this is exactly what was done to my sister. The family house, bought in the 40's for $4000, was transferred over the years, from my grandmother, to my father, then mother, now sister. It was gifted 3 times, never inherited, which would have stepped up the basis. When she sells it (mom passed recently) she will have a $600K gain and nearly $100K tax bill due to this series of transactions.

As littleadv stated, the trust is moot. What I've answered is the second nuance of your question, the tax effect of the gift. Not upon gifting, but for the eventual sale. In my sister's case, lawyers often know just enough to be dangerous, how to transfer property titles, but not enough to advise on the future tax consequences.

littleadv is correct in his response, no surprise there. But, given that information, there are consequences you should be aware of.

Gifts to any non-spouse are a non-issue up to $14000/yr per person. Not enough to gift a house. You would need to tap your lifetime gift exclusion, which in 2016 is $5.45 million. More than enough to give your house away with no tax consequence. There's a form 709 that you need to file. It's just a way to track your generosity over the years, and tax you once you're above this level.

That was the easy part. The tough part comes later. Gifts' tax basis is not adjusted. In other words, you die and leave the kids a $1M house, they now have a basis of $1M and can sell with no cap gain or keep it, but pay only the gain from sale above $1M. When you gift your $1M house, you may avoid the gift tax, but your kids now have your basis. It's very possible you bought that house for $250K, never tracked any updates, and the kids will have that $250K basis for their eventual sale, and potential tax due on the $750K "gain."

On a personal note this is exactly what was done to my sister. The family house, bought in the 40's for $4000, was transferred over the years, from my grandmother, to my father, then mother, now sister. It was gifted 3 times, never inherited, which would have stepped up the basis. When she sells it (mom passed recently) she will have a $600K gain and nearly $100K tax bill due to this series of transactions.

As littleadv stated, the trust is moot. What I've answered is the second nuance of your question, the tax effect of the gift. Not upon gifting, but for the eventual sale. In my sister's case, lawyers often know just enough to be dangerous, how to transfer property titles, but not enough to advise on the future tax consequences.