We currently send my Mother-In-Law money every month; I know that Darling Husband did this before we were married. His family has never been well off, and the fact is that now that his father is gone, his mother’s savings and her social security are not enough for her to live on. The main problem is not that she spends badly; the main problem is that she wouldn’t really be able to afford decent food and medical care without a little help.
However, when it became apparent that she was going to need help (after his father died) here is what we did. We sat down with his brother (thankfully an MBA and quite financially astute) and his mother, and looked at all her finances. Brother-In-Law drew up a budget, and figured out just how much money she was short every month. Then this amount was divided equally between us, DH’s brother, and DH’s sister. (There was some implication that we should pay more, since there are two of us – I pointed out that we have DH’s two kids in college, while neither of his siblings have kids at all – which put an end to that pretty quick.) Then we made sure that Brother-In-Law actually handles the money. He pays the bills; he gives her an allowance every month; if something unusual happens (water heater breaks, she gets more or less hours than she expects at her part-time job) he adjusts accordingly. I was adamant that while we are happy to help out, we need to know where the money is going, and be satisfied that it is really needed. Neither of us has so much money that we are interested in just giving it away.
The main problem (IMO) is actually DH’s sister, who also has no savings, and no health insurance. I have made it clear that while I understand the obligation to help one’s parents out if requried, I’m not going to get into the business of supporting siblings, particularly when their situation is really the result of their own decisions (like not wanting to work for "corporate America" and also preferring to spend money on designer clothes than on health insurance). DH’s mom was in the habit of helping his sister out with her bills – but we made it clear that if we are contributing to her finances, that won’t happen. Why should we pay for MIL’s medication while she is slipping money to SIL on the side?
Once the kids are out of college and we have a little discretionary income, we are going to go the reverse mortgage route. This might be a nice thing for you to consider, if Future Mother-In-Law has a house. Essentially we will buy her house back from her, which will give her money to live on, and continue to let her live in the house rent-free on the condition that the house belongs to us upon her death. This leaves us esssentially providing all the excess financial support she needs, but also gives us something for it in the end (and avoids any kind of crazy battle over the house after her death).
If you can’t be sure that the money that you are sending Future Mother-In-Law is being spent appropriately, maybe think about doing something like putting her utility bill, car insurance, or account at the local pharmacy in your name (so that you pay these bills directly rather than sending her money). We have also considered this as an option if it seems like the money doesn’t end up where we like. That way you help make sure she has the things she needs without actually handing over cash, which could end up being spent on the wrong sorts of things.