@Taxes-by-Rocky  Thanks for the reply…. From the bottom up….

i started with the attorney who drafted the agreement. 12 years ago he said it was a grantors trust and I have treated it as such since.  

the grantors have been collecting rent on one unit (and reporting it on their 1040) and living in the other. Moving forward, rents will probably be deposited to the trust and grantor will likely pay rent to the trust… 

not looking for stepped up basis on death. Property doesn’t transfer on death. 
did not file gift tax return.

IMO, the whole problem with this is that by putting