>Are children or family members liable for alleged fraud or missing funds if there is no will or estate?
If there is no estate, family members are not liable.
If there is “any” estate like house / car / savings / fd; that estate is liable. If family members have availed of such estate (like claim money via nomination in bank account), they can be liable to extent of that amount.
>Should we talk to a lawyer or file a police complaint for protection?
Do not take any action, but do talk to lawyer to find out what actions can be takes as situation develops.