If the niece or nephew are under age then yes I think it would be best to ask / tell the parents that this is something that you are looking to do so to make sure they are okay with it. However in saying that most trust deeds that I've looked at already have multiple extended family members mentioned as beneficaries - aunts, uncles, sons, daughters, nieces, nephews so don't think it is anything unusual. if its a discretionary or family trust the trustee of the trust determines who any trust profits/income gets distributed to. I can't see how a tax situation would arise unless they receive a distribution from the trust at which stage the parents would be aware that income had been earned and that there might be tax implications.