Brother-in-law encourages my sister with early dementia to drink which then worsens her functioning. Help!

You say your sister HAS no money, so I guess money isn't the motive.
Your Sister and her husband live together, I assume, a married couple?
And you have contacted APS who found no problems they could address?
I think that you have basically done what you are able. You cannot place your sister against her will unless her dementia is severe, and you have guardianship. If her husband fights to have guardianship and keep her home, it is unlikely you would win.
I would say you are now in the realm of what your sister herself wants. Has she expressed a wish to leave her husband? If so there are ways to do that no matter she has money or not. If she wishes to stay with him I am afraid intervention at present is at a standstill. If you have POA you may wish to discuss the alcohol problem with your Sister's doctor, but I don't know that he could directly intevene in any way. Unless you live with them it is difficult to say whether your sister is drinking because she herself chooses to, or because she is being "encouraged" to do so.

You can pursue guardianship but it can be costly and no guarantee you will win it. You will need to prove his abuse of her in court. Did she sign a pre-nup with him? Like others I don't know how she can keep money from him without an actual arrangement. I agree with going back to the original lawyer to get clarity -- it may be a misunderstanding on your sister's part. Wishing you success in helping your sister.

If there truly "is no money to speak of", then your sister would probably qualify for Medicaid, and could be placed in an appropriate facility. At least there, she wouldn't be able to drink. And if your sister and brother-in-law are still married, I'm not sure that any of the money can be "solely hers". Most states now are considered 50/50 regarding any personal property or monies, so not sure how you will keep him from it. Best wishes.

Personally, I'm not completely clear on what APS can actually do and under what circumstances. I think you should direct these issues to the attorney who prepared the will/trust and see what he/she suggests from a legal angle regarding protecting your sister's physical and financial wellbeing. We have a few problem drinkers in my family and there is one in particular (multiple medical problems) whose husband consistently encourages her to drink. Wife gets mean/nasty and hurtful to others. When hubby gets sick of it, he cuts off the drinks and tells her she's done (until next time, of course). A lot of spouses end up enabling, but *encouraging* the drinking is a whole different ballgame.