There is nothing going on between me and the beneficiary as I am the beneficiary.

There is no double benefit to the trust as the trust is getting one deduction for the amount of state tax paid either in the form of a separately stated line item for state income taxes paid or an increased distribution deduction.  The bottom line is that the trust is left with more or less the same tax liability either way.

What is bothering me is that both the trust is getting a benefit in the form of a tax deduction and the beneficiary is getting a benefit in a like amount (subject to tax respective tax brackets) through a reduction in the amount that the beneficiary must report as his distributive share of trust income.

I do very much appreciate your input.