If my wife’s family (and I) know that the elderly father of said family should not be driving and the elderly man goes out and has a traffic accident by where somebody's property is damaged and/or somebody is hurt or killed, can I or anyone in the family be held liable? Keep in mind this elderly man has nothing of value that he can be sued for. However, my wife and I own houses and other property here in California.

Do you hold any legal status over him? Like guardian ? Has his doctor advised he doesn't drive?

I suppose someone could always decide to sue you or your wife - the real question is would they win? From what you describe - I doubt it, especially if the old man is using his own car (not borrowed from you), and neither you nor your wife have been made his guardian. However, if you and your wife have serious concerns about his safety on the road I would hope that you would collectively talk to him about it, and if need be take matters into your own hands. Don't wait for him to get into a serious accident.

A person can file suit on you for almost anything they want to, it would be up the District Attorney or a Judge to determine if the case had enough merit to take it to court.

This is just my thoughts and I live in Texas, things can be different in other states.