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Hi, Steve H
It sounds more like the Mac is getting stuck on the wrong Office license or saved sign-in, rather than the family invite itself failing. The share only becomes active after the invited person accepts the invite and joins the family group, and it also will not work if that person is already using another shared subscription.
Besides the solutions provided by the Q&A Assist, here are some suggestions you can try:
First, sign in to the wife’s own Microsoft account on the web and check Services & subscriptions to confirm the shared Microsoft 365 benefit is actually showing there. The invite must be fully accepted with Join now, the organizer must still have a share available, and in some cases benefits may take a little time to appear after acceptance.
If the share is showing correctly, completely sign out of all Office apps on the Mac, then run Microsoft’s Office License Removal Tool and open Word or Excel again to sign in fresh. This is usually recommended when the Mac is still holding an old Office license or the apps keep failing to recognize the subscription.
If that Mac was used with older Office installs before, it is also suggested that old Office sign-ins/devices be signed out from the Microsoft account page and then retried. If activation still loops, it is suggested that VPN or privacy tools be turned off during setup, because they can interfere with Office sign-in on some Macs.
Thank you for your patience in reading, I hope this information has been helpful to you.
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