Remember that someone always has to pay the tax (except in the case where you die and your grandkids inherit the assets.)
In short, if you give them stocks, then whenever they sell them, they will owe capital gains tax back to your original purchase price. If you do this, make sure you give them as much paperwork as you can from your broker proving what you originally purchased, plus any basis adjustments over the years. If they sell the securities and can't prove your cost, they will owe capital gains tax on the entire amount.
You will be required to file a gift tax return if the amount of the gift is more than $15,000 per person per year. However, no tax is actually paid unless your lifetime total of gifts given is more than $11 million. The gift tax return allows the IRS to track the gift against your lifetime limit. If you are married, you can also give each child $15,000 in the name of your spouse without triggering the gift tax return requirement.
Also important: If you go into a nursing home, Medicare does not pay and you have to apply for Medicaid. Medicaid will require that you disclose all large gifts you made in the past 5 years, and will reduce your Medicaid benefit or require the gifts be partially paid back to you before they will cover you.
You may want the assistance of an Elder Care Attorney to plan how to gift and manage your assets for everyone's benefit without being vulnerable to the government claw back.
