Thank you for the quick response...I really appreciate it.  

It makes sense to me from the tax reporting purpose, half of the trust is a living trust and half of the trust is an irrevocable estate trust.  That is a great idea to report taxes - thank you!!

Now the trust never had a EIN...so I guess an EIN needs to be applied now to file the Form 1041, and I can attach a statement noting the EIN was applied late?  

The CO trust was terminated and all assets were transferred to FL successor trust, which bought a residential house for the wife to live in.  No further transactions after that.  I guess this should not be counted as the CO trust distribution and no Form 706 is needed, is that correct? 

P.S., after another call with the client I was told the CO trust is still there.  I've updated the facts in this threads.  Sorry!