If your husband are gifting a propert or share of the property - he may do this by signing quick claim deed and register it in the county where the property is located. He likely need an appraisal to identify the fair market value of the property and share of the property you wish to transfer.
As recipients of the gift - your children do not need to claim it as income. There is no any limitation for the value of the gift. Please see for reference IRS publication 525 page 30 - http://www.irs.gov/pub/irs-pdf/p525.pdf
That is an obligation of the donor to file a gift tax return and pay a gift tax if applicable.
The donor is required to file a gift tax returns if the gift amount is above $12,000 per person per year (for 2007). There will not be any gift tax unless lifetime limit of $1,000,000 is reached. Publication 950, Introduction to Estate and Gift Taxes - http://www.irs.gov/pub/irs-pdf/p950.pdf page 7
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