Yes, this does sound strange.
You said that the will indicated that the IRA was to be split evenly between the children and grandchildren, but the governing document is the trust document, not the will (unless by "trust" you mean your grandfather's estate and there actually is no trust that is the beneficiary of the IRA). Since there is apparently distributable net income (indicated by the fact that there are at least some Schedules K-1 being generated to pass through taxable income), Schedules K-1 must be sent to all listed beneficiaries and the income passed through to the beneficiaries equally and the income reported on each beneficiary's income tax return.
Perhaps there is a trust that lists only children, but it was your grandfather's desire that the equal sharing included grandchildren. In that case, distributions and Schedules K-1 would be given to the children and any money given to grandchildren would be gifts from the children to the grandchildren. However, the trustee of the trust has no authority to force the children to gift money to the grandchildren and could only send the money to the grandchildren on behalf of the children with the agreement of the children. Depending on the amounts, that might trigger the requirement that the children file gift-tax returns.
If you were a potential legatee listed in the will, you should probably have received a copy of the will as an interested party. It would seem that the same would be true of a trust, but I have no experience with that.
