Dispute of legal heir and nominee for the good of minor child

My elder had made my mother as nominee for insurance policy 2 years before his death due to non confidence & bad character on his wife .He was mainly concerned about the future of his children and he has doubt that his wife will not take care for them and leave them after getting money. My mother and us has not any attachment for the money and we also want to secure life of children.So we told our sister in law that we will not give her full amount of money however money will be deposited on the name of children (mother as nominee) and interest earned on the same will be given to sister in law for her and children.When children will attain the age of 21 yrs the principle amount will also automatically get transferred to their account .However She is not satisfied with that wants full money whenever it will be disburse by insurance company.She is telling to go in court for the same. Please suggest the forward path so that we can ensure good future and fortune for my brother's children.We do not want any single penny of that money . Is that option of trust will be applicable in that case so that all the management of money will be done by third party and on the same time trust can ensure proper care of my nephew and niece by my sister in law.