I wish I had an answer for you, but I don't. I'm sure there's lots of people here who will though!
I just wanted to say how sweet of you to buy the dog from your sister, to ensure it has a loving home, but also so your niece can still be with it. It has to be pretty devastating when you're young to have something you love and have no say-so about whether it stays or goes. I think that's pretty sad. But the puppy and your niece are really blessed that they have you!
Hope you can get things straightend out...just remember, that dogs live to please us, so I'm sure any problems he's got will resolve with love and consistency.
I personally wouldn't change it's name....or I'd ask your niece what she thinks about it. I did get a bird (I was at LEAST it's 3rd owner and it had been a wild caught, imported bird, so no telling how old it really was by the time I got her) but the lady I bought her from called her "big bird" UGH...such a beautiful creature with such a generic name.....I changed it to Nova, and she did just fine....so I guess it wouldn't be so bad. And besides, now that I think of it...I call Max about a hundred different things...Maxi, Maxalicious, dogalicious. baby dog, cutie patootie, Maxil, sweetiepie....he answers to all of them, LOL....., so I take it back. But I'd still run it by your niece just to show her a little respect, which I think might make her feel like she hasn't lost the dog totally.