Estate Law Questions? Ask an Estate Lawyer.
If one of the daughters has done that, that is not the proper procedure... Several questions though: What did your father-in-law own? Any land or houses? Vehicles? Was any property like that in his own name alone, or was anything held jointly with a spouse?
When someone dies without a will, and if the estate needs to be probated, someone (usually a close relative like an adult child) will consult with an attorney and open the probate matter. When this happens, the person can be appointed administrator by the probate court & make a publication to any potential creditors that the estate will be probated. Only after any outstanding debts, expenses, and taxes are paid should the administrator then distribute any remaining assets of the estate to the heirs.
How much was the property worth that she distributed? Was it to whomever she wanted, or was it distributed to the rightful heirs?
If none of the probate formalities have occurred yet, I would recommend your spouse (I'm assuming a direct descendant of your father-in-law) to consult with an attorney and begin the formal probate process that way. This should block the daughter from doing it, and since she has already acted inappropriately, the court would not look favorably upon her. She might be held liable for property she has already given away, but trying to get it back may be like trying to put toothpaste back in the tube...
Your best bet is to consult with a probate attorney in the county where your father-in-law lived and see what your best options are to proceed.