My FH and I are a few months away from our wedding, and recently his mother approached us regarding the rehearsal dinner. She offered to arrange and pay for the event, since my FH's father gave us money to pay for the honeymoon (the two has been divorced for years and the father is remarried). My FH and I were hesitant, knowing that his mother currently works part time while attending graduate school and living in her parents' basement. Until a few years ago, she was unemployed and her house was foreclosed. She mentioned a few ideas, and after very little discussion, she reserved a fairly expensive restaurant.
I'm not sure how to proceed; she has told my FH that she has enough money to pay for the dinner, but I'm afraid that she still isn't in a position where she should be spending this much. I am very fortunate to have parents who have offered me essentially carte blanche for my wedding (as their only daughter), and both my FH and I have good jobs and no debt other than my mortgage. All things considered, I really appreciate my FMIL's enthusiasm and support, but I feel uncomfortable taking her money.