What can my sister do? I think she has been defrauded of her shares in my mother’s estate.

Under your facts, your niece made promises of future financial and personal services to your sister in exchange for your sister presently gifting her share of your mother’s estate to the niece.  The promises were never kept and your sister is left with nothing.

Your sister’s problem is that all of these promises were verbal, and your niece can invoke legal defenses (such as the statutes of fraud) to fend off any legal claims. Further, if the life insurance policy named the niece as sole beneficiary, she alone is entitled to the death benefits.

These verbal promises, however, were quasi contractual agreements; that is, a court could find that a contract was implied by the conduct of the parties. This is an “equitable” remedy, which is to say —in the interest of justice–argument. There may also be elements of fraud and/or fraud in the inducement.

Your sister should speak to a CA lawyer familiar with contract and tort laws in resident state of your niece. It is possible to seek damages or restitution from your niece, but it will need a skilled lawyer to frame the argument.