You can certainly sue your sister - anyone can sue anyone else by just going down to the courthouse with a complaint in his hand and the fee to file along with him to pay to the Clerk of the Court. Whether you are going to win your lawsuit is quite another matter. And whether the price you are going to have to pay for the rest of your life in damaged relations within your family is worth it to you is quite another question you need to answer for yourself.
You are obviously angry at being "cheated" of money. Perhaps there might be a way of approaching your sister short of going to court over the subject. Have you tried alternative methods of approaching her? You might want to hire an attorney to serve as something of a mediator on your behalf to contact her and open the door to communication before having to pull a trigger.
My experience has been that many trips to court can be avoided and family ties saved by the use of simple and gentle negotiation short of litigation. Maybe it's my Southern attitude and Midwest manners. More likely it's the result of having tried to stay OUT of court for 37 years.
You need to consult a probate/family law attorney.
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The first thing lacking in the information provided is a time frame. How much time has lapsed since you learned of transfer of funds to your sister? There may be statute of limitations issues.
That said, you could probably benefit from a consult with a probate lawyer. If I am understanding the situation correctly, you were born after your grandparents died and were not necessarily entitled to money from their estate. Nonetheless, your parents set up a UGMA account for both you and your sister. This seems like it should properly have been a conservatorship for your sister, but that is something an estate lawyer would know more about. The next step was that your parents apparently tried to correct the error by transferring your settlement from tort claim to your sister. I'm very confused as to how this could happen, as generally settlements involving minor children are subject to approval by the probate court, and can't be disbursed without probate court supervision. But giving your settlement away wihtout court approval seems like another mistake by your parents.
It seems to me that the persons primarily responsible for this mess are your parents, who may have unjustly enriched you, and then "corrected" the situation by breaching their fiduciary obligation to protect your funds as trustees. There may or may not be a claim against yur sister, and it may or may not be collectible and the statute of limitations may or may not have run on the whole debacle. Technically, this is what we lawyers call "a big freaking mess."
I don't know how much money is involved, and whether it would be worthwhile to sort it all out and engender more hostility within the family. An estate or probate lawyer would be able to clarify your rights and help you answer some questions. But expect to pay a retainer and an hourly fee for the service. This is not the kind of issue that humble contigency fee injury lawyers tend to handle.
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