The trust received a death benefit upon my mother's death. The state is not where the trust is but state income tax was withheld. My understanding is I need to file a nonresident fiduciary return with that state to get the refund of taxes and then file a resident fiduciary return for the state where the trust resides. My question is are me and my brother going to have to file taxes in both states and in turn be double taxes as we will have K1s from both states?
I should also note, this is the only income the trust received.
It depends. You are not required to issue K-1s to the beneficiaries - the trust can pay the taxes due and then you skip the K1s. The trust usually has a higher tax rate than individuals do so most people don't want to do that. But if it isn't a lot of money then you can avoid those K1s and thereby avoid a filing requirement.