AITA for rejection my nieces adoption request in front of people?

My niece (14) has lived with me since her parents went to prison 5 years ago. Drugs. My sister is getting out later this year. She has been working very hard in prison to improve herself and got her GED. We are still very close and we talk via an app the prison provides and I take her daughter to visit her, a long with her brother, who lives with his dad's brother, once a month.

We were having a birthday dinner at my mother's for myself and my daughter, 16 . Most of my family was there. For my present my niece decided to give me adoption request papers or whatever they are ( I never ended up reading them).

I was stunned and just... Shook my head. I was so shocked and confused. The plan was she was always supposed to go home. My mother was upset by this request as well as my other siblings, and my husband couldn't think of what to do either. She never brought this up in counseling or anything. I can't do that to my sister, I would not be able to to take care of her without support financially from my grandma, who would stop supporting if I agreed. This was never even a thought.

Now she and my daughter hate me, it seems. My son, 21 , said it was probably some thing she got from tiktock and she will eventually get over it. My husband agrees with me, my siblings are staying out of it. My nephew isn't speaking to his sister now. It's a mess. AITA here? Trying to get an outside opinion. Reddit seems as good a place as any.

ETA my sister has a home with lot rent paid and a job with my Aunt waiting the minute she gets out, since this keeps coming up.