Technically, yes. If you deed your house to your beneficiaries (let’s assume your daughter) during your lifetime, you won’t own it at death and so won’t be subject to a probate (unless of course your other assets require one). Other than the more obvious problem with this idea (that your daughter now owns your home and so you have lost all rights over it) is a lesser known problem having to do with income taxes. I will explain by way of an example. Let’s say you bought your house many years ago in Manhattan Beach for $100,000. That $100,000 is called your cost basis. If you now you sell your house for $1,000,000 you will have to pay capital gains tax on the profit of $900,000. Of course you may be entitled to an exclusion…currently $250,000 so you only have taxes on $750,000…still a lot of money. However, if you keep the house until you die, the beneficiaries who inherit it (whether it be by will, living trust, etc.) will do so with an increase in the cost basis to the fair market value at your date of death.
So in this case, let’s assume that your will or trust left the house to your daughter, and at your death it had a fair market value of $1,000.000. That would be her cost basis. So if she decides to sell it right away and does so for $1,000,000, there is no profit or gain; therefore, no capital gains taxes. However, if you had given it to her before you died, she would taken your cost basis of $100,000. This is true for any gifts given during life – the recipient of the gift keeps the same cost basis that the giver had. So, at least for highly appreciated property, for income tax reasons, it’s generally not a good idea to make the gift while you are still alive.