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You may want to have your father sit down with a trusts and estates attorney to discuss the disposition of his assets (including the home) after his death.
There is no default mechanism for this to work, and granting his sister's child a life estate in the property gives her a real property interest in the property (ownership) not just a leasehold. There are other ways of structuring this but you will want your father to discuss this with an attorney. If you are going to be a beneficiary of the property in some way, it would be helpful if you were involved in these discussions, at least to some extent, so that you know what to expect (and whether you want the gift at all - you do not have to accept a bequest).