1. First, it is estate tax, not inheritance tax. Estate tax is tax on the estate (遗产） paid by the dead person's account. Inheritance tax is tax on the inheritance (继承），paid by the living person.
A father's estate is a son's inheritance. 父亲的遗产是儿子的继承。
Federal tax is on the estate。 There are some state still charge inheritance tax, see
http://taxfoundation.org/blog/does-your-state-have-estate-or-inheritance-tax
2. Living trust
Revocable living trust cannot provide estate tax avoidance. This type of trust is used by most people, where the donor (you) still control the trust.
Irrevocable living trust can provide estate tax avoidance. In this type of trust, the donor (you) gives up control of the asset. Someone else (laywer, bank, investment advisor) manages the asset for the trust. You can never get the money back under your control, but you can still benefit from the asset for the rest of your life (or whatever the trust agreement says).
http://www.bankrate.com/finance/taxes/estate-taxes-trusts-1.aspx
