Thank you for your question. My name is ***** ***** I will be able to help you with this.
It is entirely possible to transfer a property into trust for your two children now however the tax consequences depend on a number of different factors.
Firstly, to avoid an immediate charge to IHT the property value must be below £325,000 and you must not have made any previous transfers into trust within the last seven years. Please also be aware that a transfer into trust is a disposal for capital gains tax purposes however you could elect to 'hold over' any gain so it won't have to be paid until the property is ultimately disposed of. Note that if you continued to own your property until your death then capital gains tax would not be payable.
The second important point regarding inheritance tax is that you cannot be a beneficiary of the trust into which you transfer the property. This means that you cannot continue to receive the rent which must be paid to the trustees or assigned to the beneficiaries. The trust rate of income tax is much higher than the standard personal rate so the latter option might be better depending on the beneficiaries circumstances.
As long as you do not retain any benefit in the property it will be outside of your estate for IHT purposes as long as you survive for seven years from the date of the transfer.
This is quite a complex area of estate planning so I would recommend that, if you decide to go ahead, you look for a specialist adviser to assist. I can highly recommend any member of STEP (the Society for Trust and Estate Practitioners) as they will all be suitably qualified in this area of law.
I hope this information is helpful. Please let me know if you have any further questions.
Best regards, Helen