Your nephew may act out because he is entering his turbulent teens, and this is a phase. It could also be that his mother has yet to make him suffer the consequences for his disrespectful behavior toward you and his grandmother.
Since your sister and her ex are co-parenting, they should both be talking to their son about respect. His grandmother also has a tongue, and she shouldn't tolerate her grandson's bad behavior, either.
Personally, I would handle it by avoiding the kid until he straightens up, which may take forever.
I lost my 19-year-old son 10 years ago to suicide. This has been the worst decade of my life, and I grieve for him every day.
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