My 2c . . . No, it's not.
My mom was a resident of FFX Co when her dementia developed and up until I moved her in with me in another state. She had been an attorney, had a great estate lawyer, a CPA, and a long time dear friend (another lawyer) all involved in her estate plan who all worked with me and my brother to make decisions re: how to handle her estate and understand the legalities during her lifetime.
1a) My clear understanding was that it was/is extremely hard to determine someone doesn't have the legal capacity to make their own decisions and that even mid-stage Alzheimer's wasn't enough to remove that capacity legally in any clear way. She would have had to be VERY far gone to have successfully removed her legal ability to make her own decisions.
I gained that understanding early on from the various attorneys/etc (including my own personal one that has/had nothing to do with Mom's fleet of advisors), and I kept that at the fore of my mind when struggling to help Mom during early stages. I.e., I knew she was unsafe to drive, but I had to tread lightly and use medical professionals to justify reducing her driving. (She never did lose her license, even though I took away the car keys eventually.) And I knew she was being taken advantage of by numerous charities, but again, we treaded lightly and coached/cajoled instead of argued. I can count on one hand the times in 4 years of care giving when I actually "argued" with my mom -- and they were situations of immediate, stark, life and death consequences. Actually, only two occasions come to mind. I knew that if I alienated Mom, not only would it be hard on both of us, but it would endanger her because if she didn't trust me (and my sibling), she'd be extremely vulnerable to exploitation or worse. So, I understood that my ability to protect her relied on her trusting me.
Anyway, bottom line is that with dementia, at least in VA (and I think most/all states), family is really limited in how they can protect the person, and are essentially reliant on subtly taking control (intercepting mail, screening calls, reorganizing finances, disabling a vehicle).
If a trusted loved one or advisor doesn't do these things, the patient(s) will be destitute in short order, no matter the intentions of the family, IMHO. Clearly, it is abusive/wrong to use those powers to exploit anyone or to harm them by reducing contact with loving family members, but anyone in the USA who has taken care of a loved one with dementia (especially one with financial resources) will understand that "white lies" and "lies of omission" are an imperative (and regrettable) part of successfully caring for someone with dementia.
So, essentially, I'm telling you all this to help you understand that although what happened with your fiancé's dad was possibly wrong/immoral it was very likely completely legal. And, at this late date and with the "patient" being unavailable for examination/evaluation, it's pretty much impossible to even imagine you being able to prove that a 5 year old will was invalid.
1b) My own mom went STRAIGHT to the best estate attorney she knew when she began her diagnosis process. I.e, when she first knew she had dementia. She went and created an entirely updated estate plan. BECAUSE she wanted to do things differently and to tweak things before she truly lost capacity to make decisions. In prior years, she hadn't thought her modest (about the size of your fiancé's dad) estate was worthy of the $$$$ estate attorney, but once she suspected what she was facing, she knew to get the legalities dialed in. I think it makes perfect sense. People update their documents when they know they are at risk of dying soon. That's what we do. Mom's changes weren't dramatically changing who got what, but were more strategic/organizational to simplify her estate and clarify/refine who made decisions for her during her lifetime, etc. She didn't even consult her heirs at that time; just worked with the professionals to design her plan. And that was "in the early stages" of dementia. And she was 100% competent to do that, and according to those advisors, would have been still legally competent to change again much, much later on.
2) I also clearly understood that any legal fight would have been a 6 figure fight.
3) I agree on spending the money on therapy vs legal fees. WAY better return on your investment.
4) Especially since your dad's wife (of 25 years) also requires care in am expensive facility, then I would do my best to not resent her inheritance. I wouldn't think about the possibilities of where the money goes when she passes, because frankly, if their estate had only been in the 2-3 million range and they've both been in an expensive facility and receiving care for years, it's highly likely that estate is much smaller already and will be zero in not too many more years. Money disappears very FAST when dealing with dementia, IME.
If this was MY spouse, I'd be trying to guide them to see that "of course Dad left his money to his wife . . . she was his partner . . . and he was a loving, responsible person and wanted to continue to care for her even after his death. . ." When the "left over money / 2nd to die" issue arises, I'd say stuff like, "she'll probably live a very long time, and there's likely not much if any money left already . . ."
5) You and your fiancé really have no idea how much of Dad's money was actually step-mom's money. My spouse has earned 95% of all earned income in our marriage, but the large majority of our "wealth" accumulation is due to me, not to mention the kids I raised and educated. My spouses's family has no idea, whatsoever, of the financial contributions that have come through me -- lots of strategic decisions, business decisions, family budget/finance decisions, real estate investments, inheritances, etc. I could totally imagine anyone outside our very closest family members thinking that all "our" money was actually "his" money. In reality, legally, more than half would go to me if we divorced right now (inheritances) and that's with me having merged most inherited money with our family finances instead of keeping it separate to protect it from my spouse. So, again, I'd encourage you to not assume that "dad's estate" was really Dad's money. Think of it as "their money" and feel good that it's being used to care for Dad's spouse.
If Dad and MIL had divorced, presumably, she would have gotten half at the very least, and possibly more.
Besides, when you've been married for 25 years, in a decent marriage, you care about your spouse as much as you care for yourself, and would DEFINITELY want any/all needed money to go for their care knowing they were already vulnerable and in no position to earn/get more money themselves. And <2M for one person is minimal IMHO when considering the expenses of long term institutional care.
6) Understand that if your fiancé moves forward with a legal fight, she WILL need therapy as well, because it will be utterly brutal for her and very, very hard on her (and you).
My dad died due to medical error, and we did sue, and eventually settled. The couple years of having to answer questions aimed at putting a dollar value on his life and a dollar value on our relationships was brutal. Lawsuits require dozens to hundreds of hours thinking about and writing up answers to these sorts of questions. Consider the pain it will cause your fiancé to address them, and if you love her, help her access therapy, not attorneys. Here are some questions they WILL ask:
a) How many days/weeks a year did you spend with your dad in recent years? Why? Why not more? Where? When? Prove it.
b) How about holidays?
c) How often did you speak by phone?
d) Why didn't you fight to spend more time with him?
e) Why hire a lawyer now instead of when you were being restrained from seeing/speaking with him?
f) What steps did you take to protect him from the isolation/exploitation you claim was occurring?
and on and on, ad nauseam. And, when they find a tender or painful spot, they will push harder and ask more questions. Even if they had a wonderful relationship, the process WILL cause pain and WILL find tender spots.
I do NOT want answers to any of those questions. I am just urging you to consider what pain the legal process can inflict on your fiancé. It's a really, really ugly process.
My advice to friends, having been through a "successful" lawsuit process over a lost loved one is to NOT pursue legal action unless you really need the money to take care of an impacted loved one (ie., family member survived the malpractice and needs care, or a minor child left, etc.). I usually suggest filing a board complaint to "punish" them, as that's a once and done form in most cases. I would use the same principles here, and so would avoid legal action.