We went through this recently with a number of endowed funds. Working in tandem with our General Counsel, a 'courtesy letter' was drafted and sent to the next of kin. This letter provides the proposal for criteria and asks that if the recipient does not agree or has information to offer, to contact the university by mm/dd/yyyy.
Every state is different, however.
If the gift agreement (any documentation) does not contain language addressing the possibility of amendments and we need to change the agreement for any reason, and the donor is deceased or otherwise unavailable, UPMIFA provides two options.
This applies to funds that even don't have a gift agreement, if it was established by a donor. So the niece would not be able to change or establish the fund purpose. Also, was there anything in his will?
I am not a lawyer (just talk to them hourly here at NC State) but I would talk this over with legal. I have attached our talking points on UPMIFA.
Let me know, if you have any questions.