Prodigal son taken in by Walter transformed (7)
I believe the answer is:
wastrel
'prodigal' is the definition.
(I know that wastrel is a type of prodigal)
'son taken in by walter transformed' is the wordplay.
'son' becomes 's' (genealogical abbreviation for son).
'taken in by' is an insertion indicator.
'transformed' is an anagram indicator.
'walter' with letters rearranged gives 'watrel'.
's' placed into 'watrel' is 'WASTREL'.
(Other definitions for wastrel that I've seen before include "Prodigal" , "Spendthrift" , "Person who dissipates resources self-indulgently" , "Layabout" , "Profligate" .)