Something happened at that initial level. The estate probably did not need to file a 1041 because the trust could have done so initially. Otherwise, the estate could have reported the income and taken the charitable deduction (if provided for in the will) and there would have been nothing to "transfer" to the trust.
The H code is nothing more than an NIIT adjustment. If the threshold for filing an 8960 is not reached, then you need not be concerned with Line 14 with an H code.
Anyway, this could have been handled differently (and better) but it clearly was not. At this point, you might try to get an amended K-1 from the estate showing the deduction on Line 11 as a final year deduction. That way you could enter the deduction on Schedule A of the trust's 1041.
