My SO’s cousins had a similar situation. The new husband thought he was entitled to the family’s money just for being married to the cousin. Eventually she even sued her mother to try and get the money from them, but it ended in the two of them divorcing and her eventually apologizing to her family for how she acted.

If I were you, I would talk to a lawyer, then your parents, and then bring in the SIL and go over all the issues with her current husband to show how bad they’ve become. It sounds like she let this new guy into the finance information too early and now he has some warped expectations about who’s money it is.

Based on what I’ve seen in the past, this will only end in the SIL and her new husband being all but ostracized from the family, or them trying to take legal action to take control of your nephew’s finances.

You should make sure the trust is legally secure for your nephew, otherwise your SIL and her new husband may try to take it over.