In addition to working on Just Answer, I also am a senior manager for a very large agency whose main purpose is working with the elderly. I would be happy to answer your questions.
Legal Guardianship, which if given, will turn your father in law into a ward of your husband: This process is designed to be a bit challenging so that it is not misused.
But, if some basic rules are followed you should be able to get a best outcome.
There are two types of guardianship: Full: often called Plenary and then there is partial, which is either of person or estate. In the case of your father in law you need at least guardianship of person. So partial guardianship is adequate, and is sometimes easier to get as it is less restrictive. This status is achieved in two possible ways.
One, he is assessed as incapacitated by a physician, (best way) who, on a the doctor's letterhead and notarized (some courts accept unnotarized letters from doctors) states that your father in law can no longer care for his basic activities of daily living and is at risk. The words, at imminent risk, are suggested as this is legal language, and the courts find this easier to accept.
Option two: He is assessed by a licensed psychologist, often in your father in law's own home, at the families own expense.
He can refuse to be assessed, but surprisingly many of our own elders accept this person if another family member is there with them.
This assessment will find if he can mentally show capacity for his daily needs, or if he is endangering others through his actions (such as not being cognitively intact and driving) etc. Basic tests such as the FMME (Mini mental assessment) are given to ascertain capacity. Numbers are recalled, tasks are demonstrated, especially an understanding of eating and cooking and basic personal hygiene.
If he is incapacitated, even partially, the psychologist will write a report stating his/her findings. This will then be presented at a hearing, which your father in law has the right to attend. He will also have legal counsel if he wishes it. If he is found incapacitated the guardianship will be awarded.
If he is driving ad this is the main risk, an immediate call to the state police is in order. Although they cannot suspend his license, that can observe his driving and make an examination a condition of his continued possession of a license.
I have found the physician route the best way to go and usually most hearing officials will respect that doctor's statement as reasonable. Steven
A lot would depend on her status as a common law wife. If she is his common law wife and they have been filing joint tax returns etc., this becomes more complex.
If she is not, as blood relatives your husband has the right to see his father. This woman, holding him "hostage", can fall under older adult protective services actions. She would be considered especially at fault if she is interfering with his care. Under protective services policy she is considered a potential perpetrator of abuse if your father-in-law's access to family and medical care is compromised. Stating that he is suspected to not be capacitated adds to your case.
What would I do? I would contact your local older adult protective services department and tell them exactly what you have told me. My husband's father (he ideally should make the call) is being held by this "woman" and we are worried about his health and mental capacity as she is withholding free access to him. Protective Services can then do a face to face assessment and find out if he is at risk.
If he has made her his power of attorney this is more complicated still, as that will require your husband to show that she is not acting in his best interest, and that makes it a legal matter, and more costly.
Certainly I would call older adult protective services and let them know that you feel your father-in-law is being placed at risk (use those words) by this woman's actions. This almost always assures a face to face investigation and your husband can ask if he can accompany the investigator. (some places allow this, some not.) Steven