Is your grandfather still alive, and/or reasoning?
I ask, because I wonder if he worries about similar things with all his children. If so, there are a myriad of trust structures that could be set in place which would allow him to pass assets like these down, while simultaneously assuring that his children would be able to draw on the assets in a sustainable, long-term, even multi-generational way.
Obviously, you need to judge how to navigate your family dynamics how you deem best. Something with so many emotions like this needs to be done carefully, with good communication between everyone... going "above someone's head" and messing with something they consider their business, can definitely backfire... You wouldn't want all your aunts and uncles to get pissed and stop inviting you to christmas because you screwed up their inheritance :-)
Of course, if your grandfather has recently passed away or isn't really right for such a conversation, then that's a whole other ballgame.
In any case, your best bet is probably to do what you can to show your father how keeping it invested and not using it now, can allow him to live a long long long time without working. If you can convince him that taking a specific series of steps will allow him to live without money worries forever, then maybe he'll see the light of continuing to live at something only slightly above that level.
In that regard, giving him a specific plan is much better than advice like "don't spend your money". To someone who always spends money... that's useless advice. He knows this... it just never works for him.
Better would be: "Pull out 3% immediately when you get the inheritance (aka money for this year), then invest the rest in these specific types of funds, and automatically pull out ONLY 3% in each future year". This might give him exactly the steps he needs to feel that he can control it. (or 1% each quarter, maybe? So he doesn't have to deal with the temptation all year not to spend a giant lump sum). Make sure he understands you will help him pick the right funds and help him automate the payments and taxes and etc.
Try to focus on what he GAINS by following those steps (automatic money, comfort, security, lasting freedom), not what he sacrifices to get it. If you can convince him it's the way rich people stay rich, you're on the right path. :-)
I wish you luck.
~ DaftShadow