My dad's new wife blew our inheritance on vacations while he was in a nursing home. Do we have any recourse?

Say, for example, that William went into a nursing home years ago after a dementia diagnosis. William has a second wife, Jamie, to whom he gave financial power of attorney, and she’s managed his money ever since. William and Jamie were married for around a decade before William entered the nursing home, but William’s kids aren’t thrilled.

William’s children, Melanie and Connor, worry that Jamie is wasting William’s money and squandering their inheritance, as she’s taken many vacations and made luxury purchases while William has been living in the nursing home. Now they’re wondering what they can do.

Unfortunately, lawyers say that their options may be limited depending on the circumstances.

Spending on vacations isn’t necessarily wrong

Surprising as it may seem, Jamie’s decision to spend money on vacations and luxury purchases may not be a violation of her obligations as William’s agent, and it may not be something that William’s kids can stop.

“Not every expenditure benefiting the wife is improper,” Pamela Garrett, an estate planning attorney and founder of The Law Mother, told Moneywise. “If the couple has historically shared finances, the husband authorized the spending, or the expenses fit their established lifestyle and financial arrangements, the expenditures may be legitimate.”

Lisa G. McCurdy, founder and managing partner of The Wealth Counselor, agreed.

“A spouse is often someone the principal is legally obligated to support,” she said. “Some spending on her may be legitimate. The question is whether the spending serves your father and his household, or simply serves her.”

State law can also affect whether Jamie is acting appropriately.

“Some states have a ‘spousal support doctrine,’ where each spouse has a legal duty to support the other one,” Barry E. Janay, owner and founder of The Law Office of Barry E. Janay, P.C., told Moneywise. “That may include paying for a spouse’s lifestyle that she has become accustomed to.”

The kids may still have some legal recourse

While Jamie may have the right to spend the money, caveats remain, and Melanie and Connor may also have the right to take action in certain circumstances.

“His agent does not have unlimited authority to spend for him,” said Garrett. “If the wife is improperly depleting his assets, the children may petition the court to review her actions, demand an accounting, seek removal of her authority or recover misappropriated funds.”

A few key factors affect whether this type of action is possible.

“It might be worth asking what you mean by ‘supposed to inherit,’” Roger Diefendorf, a California attorney at Forum & Lex, told Moneywise. “Did he specifically name you in a will or trust, or was this something he just talked to you about? An expected inheritance normally doesn’t grant you control over his spending habits while he’s alive.”

Kelsey Simasko, an estate planning attorney at Simasko Law, agreed.

“You have recourse if you don’t believe she was acting within her role as a fiduciary, or within the guidelines agreed upon under the power of attorney, but you have no recourse if you’re basing the argument on inheritance,” she told Moneywise. “So long as the parent is still alive, it’s their money and not your inheritance.”

However, Diefendorf did explain that, even if the kids don’t have a legal right to the inheritance, they may still “have a reasonable concern that his wife is misusing his money, especially if her spending could leave him unable to afford the care he needs.” But the key is to “look at the power of attorney and figure out whose money she’s spending.”

If the money is separate property William brought into the marriage, Diefendorf explained that Jamie wouldn’t automatically be able to spend it. In this case, she’d have an obligation to act in William’s best interests — which may not include making financial gifts to herself.

If Melanie and Connor believe Jamie is spending their father’s separate property, their recourse may depend on their father’s condition.