Selling assets in a Revocable Living Trust

We want certain beneficiaries to receive $ from the sale of our house after we pass away. If there are capital gains from the sale (after a Step up in Basis is applied), does the trustee distribute the money from the sale to each beneficiary first and the beneficiaries pay taxes on the amount through their own tax return? Or would the trustee file a 1041 the year of the sale, allow the trust to be taxed on the capital gains, and then distribute the remaining amounts to the beneficiaries? Which option provides the least tax burden?