If your DH has the funds for it, there's probably not much you can say about it.

Does he feel the need to do this out of obligation?

I think that depends on lots of factors. How much money does he have? Will you be cared for if he dies? Are you leaving money to your kids/grandkids if you have any?  Just because he isn't allowed to see them doesn't mean he doesn't care about their well-being. 

We have a prenup and our premarriage money and assets are ours to do with as we please. We each signed off on the others premarriage assets. So if this were my husband, I'd have no problem with him setting up a trust, that took effect after his death, and left premarriage money in trust for his grandchildren. I say take effect after his death as he should not be planning to use my money to fund his retirement so he can fund the trust. 

And as long as he is paying his share of our joint expenses, he is free to do whatever he wants with the rest of his income. (We are retired. But, if he wasn't, I'd also expect him to fund his retirement before a trust.)

Our marriage assets, however, are by our prenup willed to the spouse. I'd be furious if he wanted add those to his trust. 

Having grandchildren you are not allowed to see is heartbreaking. 

My mom was high on splitting their estate equally between their direct decendents.  I have no BKs and SS had not yet asked me to adopt him.  My brother shot that down informing our parents that he did not believe it was fair for he and his kids to split 80% of our parents estate while I would only get 20% since I had chosen not to spawn.   He informed them that if they went that route that he and his kids would sign their shares over to me. If his kids refused they would forfeit their share of his estate.

Mom dropped the direct descendants idea and left their Will unchanged splitting their estate equally between my brother and I.

His kids would forfeit far more in losing their shares of my COO brother's estate than what they would gain in equal shares of our parents estate.  They were too young to even know about those discussions.

I want mom and dad to bounce the last check they ever write and skid into the pearly gates with their tires smoking, holding hands and laughing.

My family is securely provided for in the event of my demise. They will also get my half of inheritance from our parents.  Not enough for vulgar displays of excess but enough to own a nice home without a mortgage, buy a new car every 3-5 years  , travel some and stay in touch with my family and the IL clan.

I would not reward toxic if I were you or your DH.  Including the spawn of toxic.  When the Gskids are old enough to engage in personal relationships with DH and his wife,  a trust can be considered... if it is earned.

Although my SO can see his 2 gskids, he is most clearly the "odd man out" because...

1. We live a distance away and that is an easy excuse to exclude us. Problem is they did this even when we lived nearby. 

2. SD has made it clear throughout her adult life that her father means pretty much nothing to her.

3. SD and her DH adopted their second child and along with BM/husband have now chosen to make the adopted child's bio parents AND grandparents the center of their one big happy family without any consideration whatsoever to my SO and his family. SD recently took a "family" photo of the 2 children with her DH and his father, 2nd child's bio father and his father. Not so much as a mention of HER OWN father, and children's LEGAL grandfather. 

4. My SO's one biological grandchild is not considered a "grandkid" by adopted child's family but merely their grandchild's adopted sibling.  Talk about a one-way street. 

What a mess.  Imagine trying to figure out estate planning under these circumstances. I've told my SO he needs to reassess his will and be very specific with what he wants but he is reluctant to do so. The legality of it is that both of those children would be in line to inherit equally from my SO, yet he is not considered a "grandfather" to the adopted child.