Lohan's older daughter, Lindsay, was a popular child actress who more recently has been known for her brushes with the law and stints in rehab. Ali and Dina are set to star in the upcoming E! reality show "Living Lohan," which will chronicle Dina's working double-duty as mother and manager.

"It's scary because I did it with Lindsay and got her to the level of success that she is at and with the tabloids ... so with Ali now it's scary ... they are already making things up about her," Dina Lohan said.

Ali Lohan said her classmates' attitudes toward her sister contributed to her decision to be home-schooled.

"They would say stuff (about) my sister ... they start singing this song or something, just stupid stuff like that. It's just a few girls, they got suspended at school because they did a video on YouTube about me," Ali Lohan said. "I was really shocked because I thought those girls were my friends, but obviously you can't trust anybody except your family."