In my mind, the following setup makes the most sense from both a crypto and a UI perspective.
Every folder has its own password, with the key derived from it. There is no need to communicate keys, passwords or derivatives of them. You probably have a keyfile where the key is stored, but encrypted and authenticated with a key derived from the password (and also the folder id and maybe more). This way, you can verify that the password is correct on other devices.
When you create a new folder, you have the option to make it an encrypted folder, in which case you have to give a password to encrypt the folder with. The folder is also explicitly marked as encrypted. This is for the UI only, if an adversary removes it and shares it, the new device just thinks that the folder shares encrypted files.
When a device receives an encrypted folder, it initially just works as a relay to help synchronizing the encrypted folder. If you also want to see the plain files, you have to enter the correct password. As it also contains an authenticated keyfile, you can verify whether the password is correct or not.
When you share a normal (not encrypted) folder to an ‘untrusted’ device (either it is marked as one, or it already has an encrypted folder, or …?), you get a warning and have the ability to convert the folder to an encrypted one. Maybe you should even have the possibility to mark a device as ‘always untrusted’, in which case it becomes impossible to share a normal folder with it. When converting to an encrypted folder, other devices should of course be notified and the user has to enter the correct password on them in order to receive updates.
I think that you cannot really have a simpler setup than this, as every folder should have its own key and you should not have to communicate the keys, because you also want to be able to decrypt it from just the encrypted files and the password. This setup is also very flexible in mixing etc. and you could add more conveniences using the keyfile. For example, if there is some shared secret between two trusted devices, you may also add a line to the keyfile containing the folder key encrypted by this shared secret. That way, the password is not needed when sharing between ‘very trusted’ devices. There are still some details left for these additions, but I think there are some possibilities for extra conveniences, if needed.