My mother-in-law lives by herself and is basically giving money away to strangers that she does not have. What should be our next step?

Go for both Conservator and Guardian of the Person. In the petition ask for placement. It's up to the Judge.

I knew a man who was wealthy. He gave his money away and gambled a lot. What the family had to do was to have the court set up a conservatorship. The conservator paid all the man's bills and gave him a monthly allowance. The court appointed an attorney to be conservator, but family can also do it. If your MIL is giving away a lot of money, it may be the way to go. Filing for and setting up the conservatorship is expensive, so it may not be worthwhile in your situation. Good luck!