K.P.
Are you his guardian or do you have custodial (parental) rights. If you were granted "guardianship", then I think it's pretty simple. You would need a lawyer, but I think in that case it's a matter of you relinquishing your guardianship. If you were given parental/custodial rights then I THINK your daughter needs to file a legal petition and essentially go through the process to "adopt" her son from a legal standpoint.
I would definitely contact whatever attorney you used to obtain custody and have him/her walk you through this process.