Thats not exactly true, a living trust only allows the estate to not go through probate. As it stands, only the first million dollars is tax free and everything after that is taxed at roughly 38%. The tax percentage can be lowered depending on if it does directly into another living trust.
I just went through this myself, and having a living trust does not guarantee not paying inheritance tax. This may differ state to state, that i'm not sure of.....
It still sucks..... [puke]
Edited: When you go through probate, the state basically takes an inventory of all items and puts a value on them and then assess a fee for doing this "service" and then tells you how much you owe them.
By avoiding probate any personal assets are only recorded by what you claim. So say a relative had a huge collection of coins, if you had a living trust, theres no probate and unless you claim them as assets you could walk out with them and no one would know.
The problem is that even without probate, hard assets, like property, stocks, etc are all on record and theres no way to get around paying the inheritance tax on them.