Kristina, I went back and read thru all ur posts, and now I see what's been happening.
Too much drama to absorb!...I've never had to go thru something like this....and feel for you, as I don't know how I would deal with it. As for ur daughter having to sleep on the floor, that would be the last straw I would have taken from the MIL....and as some other posters have said....even my own dog does not sleep on the floor!.....it's obvious that the MIL isn't playing with a full deck.
But, I would check into HUD housing, and I'm sure there could be some nice places for you & your family. A House, not an apartment complex. There is a waiting list for that, but once you get it to going, the sooner you & your family would be out of there.
As far as the inheritance or $$ goes, that would be the last thing on my mind when having to live in such a situation as you are in. You & your family deserve better!...I would get out of there, no matter the cost and tell her to stick her inheritance ur her arse! I'm serious on that point!...I would put an end or a (.) to all of that drama...and move on....You or ur Hubby needs to get a "backbone" on this situation and do what's "best" for your family. I'm sure ur kids are and have been suffering through this also.