This seems to be the most relevant page on the IRS site related to foreign trusts: Foreign Trust Reporting Requirements

Be careful, too, in that your wife needs to declare all foreign financial accounts that she has signature authority over (part of the Treasury filing - not necessarily part of her US income tax return).

If the children are US citizens, they will be subject to US tax filings should their income exceed the threshold limits. Check IRS Publication 54 for details on "filing from overseas."
Cheers,
Bev