Do you have a provision in your will or trust to pass your house on to your kids when you die? If so, you may want to consider giving the house to them now, before the end of the year. According to this article in the New York Times, doing so could be beneficial to both your heirs and yourself.

It’s easy to see how your heirs might benefit from receiving at least part of their inheritance now. The lapse in the estate taxes only last through the end of the year, “it is scheduled to come back next year with a vengeance. Unless Congress changes current law, the estate tax rate will be 55 percent (60 percent in some cases) on all but the first $1 million, except for what you bequeath to your spouse or charity.”

What may not be quite as obvious is how gifting a large asset right now can benefit you as the giver. “By shifting real estate now, you remove the asset and any subsequent increase in its value from your estate — an especially timely move if your property’s value is depressed and you expect it to bounce back at some point. What’s more, if you wind up owing tax on the gift, the rate now is less than it may be later. Barring Congressional action, the tax rate for 2010 is 35 percent, rising to 55 percent on Jan. 1.”

Making such a large gift is not necessarily without its “hurdles” as the article calls them. Amongst these hurdles include deciding whether you want to continue living in the house, whether to break up interest in the asset or keep it as a cohesive whole, and the potential awkwardness of having a business relationship with family. The article offers a number of thoughtful solutions to these issues, all well worth considering.

As beneficial as such a gift may be to both grantor and recipient, we strongly urge you to discuss the details of such a large gift with your estate or financial planner before you take any action.