Legal Question in Wills and Trusts in Texas

Re: inheriting a house

You should re-do it with a warranty deed and you should have your living trust reviewed as well for adequacy. A quit claim deed does not provide insurable title. To answer your question, taxes depend on the size of your estate, not the property in it. The estate tax threshhold changes each year, but it is safe to say that if your estate is under $600K (the threshhold in 2010 which will probably change before then), there will be no estate tax owing and the property will be inherited at a stepped-up basis. Hopefully you had a professional prepare your trust document, but I doubt it since a quit claim deed was used instead of the proper warranty deed. Also note, that you probably voided the coverage in your title policy by using the wrong deed. You should have an attorney review what was done to see if anything else needs to be corrected or modified.

Re: inheriting a house

Since the property is a gift, your children will not have to pay income tax. See the other post regarding the estate tax consequences.