Here is my situation. My mother in law has lived along since her husband passed away 9 years ago. Her home needed lots of work, was very old, cost a fortune for her to heat etc....Her plan was when she passed she would leave the home and land it was on to my husband. But 2 years ago she wanted to give it to him then. She suggested building a new home (my husband and I were renting at the time) and we would all live together and split bills down the middle. It was a win win for everyone. She didn't have the high cost of her old home (45 year old double wide trailer) and all that went with that and we could have a new home but still be able to breathe financially. We had never questioned whether we could all get along or not. We all thought we would be fine. We took out a mortgage, made our house plans to accommodate her, meaning extra bedroom, larger house for privacy for all of us, all first floor living for her etc.... so with all this our mortgage is bigger therefore our property taxes are higher etc..... We get all moved in and get her "set up" she says "Oh I decided since I gave you the land I am not going to pay rent. I feel you will make out better if you don't charge me rent" Well we didn't say anything we decided to wait it out. So far she pays for the oil (average $400 a year) and buys groceries. Now the buying grocery part sounds good right? Well it is the stuff she likes and stuff she uses to bake pies, cakes and dinners for her bingo nights. She fills the fridge and freezer so full that we cannot buy what we like anyway. She cooks dinner most night for all of us. Again sounds great right? But it isn't always. We have tried to tell her not to cook on her bingo nights (4 nights) and we will handle it. But no she does it anyway and if you say anything she is offended and gets upset. So again we ride it out. Now the problem is she acts like this is her house, she tells us what to do and how to do it. She spends lots of money on bingo (I am talking at least $300 a week. Not exaggerating at all). My husband and I are paying all the bills. We are getting them paid but we have no money for anything else. After paying all the bills and she says things like "You left a light on" constantly, "Are you doing laundry again? constantly How much did you pay for that? constantly...the list goes on and on. Now if she is not paying the lights, the water bill etc... don't ask what we are doing in our own house. I am very frustrated at this point. So income on her part is not an issue. She has plenty and then comes home from bingo and tells us 'I won $300, or $500, or at times 1,000" and there we are not able to have any extras (out to eat, a movie etc) because she hasn't held up her end of the bargain. Now it would be easy to sit down and say "Hey Mom we need some help paying some things" Well not only would that allow her to think she has more control over our household because she "pays rent" but it would open up a can of "I gave you this property and this is how you treat me" and my husband's family may feel the same way. Help!
They seduce with promises of leaving assets, move in with the family, then take control like a tyrant.
MIL has unfortunately honey baited you and your husband and is now controlling your lives, literally. I would, however, try to get her out of the house or else consider leaving yourselves - she's going to make your lives miserable with her domineering, irresponsible and selfish attitude.
Ask yourself if you can tolerate this behavior for the rest of her life.
And it sounds as if she's also crimping your own financial status.
One thing to consider is drawing up a contract setting forth what she's expected to do, as well as the penalties for failure. She'll literally blow a gasket and start the "look what I've done for you" approach again; be prepared to retaliate with what she actually has done - ruined your lives, manipulated you, taken control, and more.
You might even tell her that if she doesn't start cooperating, you'll find someplace else to live and leave her to manage the house herself. And start looking, even if you don't plan to leave - call about apartments, houses, etc. Let her know you mean business.
Honestly, I don't think she'll ever change, so you'll have to decide where to draw the line and whether or not you'll be able to find some way to tolerate her aggressive behavior.
I'm guessing neither of you have a DPOA for her - I doubt she'd relinquish that control. If you did, I'd say start using some of her money for the household expenses, including buying another refrigerator for her so you can have yours back.
I think I might also start looking for apartments for her and pack her stuff!
Seriously, this is a difficult situation, and you'll have to make some difficult decisions, including ones that might alienate her forever. You and your husband need to discuss this to ensure you're in agreement, then take action.