I don't have much evidence for it, but of the evidence I have: In "A Tale of Two Stans," Stanly says to Stanford that as far as he's concerned, "The twins are the only family I have left." Seeing as he's saying that to his brother, and Shermie is also his brother, it would imply that Shermie is no longer there, or if you take it further, it could imply that he's dead. I'll continue this in the next reply.
Cont. Also, apparently somebody did the math, and if the baby in that episode was really Shermie, then Dipper and Mabel couldn't be nearly as old as they are. This implies that the baby is not Shermie. The logical conclusion is that it must be Shermie's kid, because why else would they be watching it, or have it in the episode in the first place?
Cont. Now, why would they be watching Shermie's kid, and why did Shermie never appear in person? My personal conclusion is that Shermie is dead, and that's why they're watching his kid. Going even further, how did Shermie die? That far is purely speculation, but I'd speculate he died in a car crash, and that's why Stanley decided to fake his death with a car crash specifically.
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