It sounds like you have an ideal situation with your MIL living in the downstairs as a separate apartment.
I do not think I would have been able to live with my ex-husband's parents when we were together. His step-mother (natural mother died before I met him) is one of these know-it all, do it my way types. I got along with her fine but just could not imagine living with her. However, his father was a very nice man and I don't think I would have had a problem with him.
As far as my own parents go, I could easily live with my mother. My father would be tough to deal with because he is Mr. negativity on everything and expects mom to wait on him hand and foot.
That all being said, I think we do what we have to do in life depending upon the situation and how it presents itself.
I'm glad you were able to work things out with your MIL.
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