thank you. In order to be certain, I would either need sight of the insurance policy or a statement by the trustees in the above respect as regards ***** ***** from the policy and if you have not obtained this, it would be sensible to seek specific confirmation from the administrators or trustees, who the beneficiary of the policy is. from what you are telling me, I am inferring that your sister has been nominated as the beneficiary of the policy and if this is the case, then the money does not belong to your brother's estate that rather belongs to your sister personally and, whilst I note she has no intention of claiming the entire sum for herself, in the circumstances, it would be open to her to simply keep the entire amount and not share it. The position would be different if the policy is to be paid to your brother's estate and has simply been paid to your sister for convenience but such policies typically do not work in this way.
If my above inferences correct, then it follows that it is up to your sister to decide with whom to share the proceeds of the policy and in what proportions. If she is desirous of sharing the policy equally between all the siblings and in the case of your sadly deceased sister, her daughter taking her mother's share, then as regards ***** ***** siblings, she can simply divide the policy and pay them their respective shares as she sees fit.
In respect of your niece, your sister may decide rather than paying the share directly to her which as you have outlined, would have some consequences for her, she could establish what is known as a protective trust which is probably similar to the kind of trust she already has. If the trustees of that trust are willing to accept further monies, then they could be nominated as trustees for that trust alternatively different trustees could be nominated which could be for example, selected from your siblings. If the existing trustees for the knees are willing to so act, then although the existing trust may not be able to accept further funds though this would be rather unusual, then aa new trust could be drawn up nominating the same trustees to manage the funds and they could simply then managed to separate trust funds