If you gift her the entire house at once, you will have to file a gift tax return and pay taxes on it. Her cost basis in the house is what you paid for it. if you wait and let it pass to her via the will, there will probably be no taxes due and her cost basis will be it's fair market value on the date of your death. If you are concerned about a possible Medicaid situation in the future, you need to speak to an attorney who is familiar with the rules. There is a five year lookback period on transfers of property or other gifts. It doesn't mean that you can't get Medicaid, just that there may be a longer waiting period.
