what type of trust a/c Uniform Gift to Minors Act (or some similar wording - it varies from state to state) or some other type of trust a/c?  whose SSN is on the a/c, your wife's, her niece or an EIN (2 digits followed by a dash followed bt 7 numbers)

if it 's hers then report as dividends per the 1099 on line 1 and then on the adjustment section as the nominee.   then she has to give her niece the amounts because her niece may have to file or amend her return.

if it's the nieces SSN there nothing you need do except make sure the niece gets a copy of the 1099 

if it's an EIN - then it's likely a trust return should have been filed - don't have enough info to say there to report as a taxable trust (subtype unknown) or a grantor trust.