Hi, miztexrgv, welcome to PsychCentral. It sounds like your mother-in-law has dementia. My stepmother got that way when my father died. But the abusive stuff could be Alzheimer's too.
My stepsister and I had to import my brother from Hawaii to take away my stepmother's car (wouldn't listen to mere women :-) and when he went back to Hawaii she started calling my stepsister and me and accusing us of all sorts of things, calling us names, and pleading for her car ("my friends still drive" :-) and telling us she hated us, etc. Fortunately she just had dementia and not Alzheimer's so there was a lot of forgetting. She would call me on the phone and we'd get into an argument and she'd hang up but then she'd call back in 5 minutes and start the conversation all over again, not realizing we'd just talked about it. I knew what didn't work so had a chance to reword my response and avoid the argument; it was almost nice.
I joined the
National Family Caregivers Association and felt a bit of support from reading about what others were dealing with and how they managed, tips they had. I also was in therapy so had additional support with how to deal with my stepmother and problems that came up around her.
You might find a local group of others caring for Alzheimer or difficult older adults and see if that can help you some.
It probably is easier if you're raised with that :-) rather than come into it with marriage. I'd follow your husband's lead though, let him deal/not deal with it as much as possible since it is his mother. I'd maybe put an answering machine (on low volume) on the phone she calls on and get a different number (second line, cell phone, computer phone, etc.?) to use for your "normal" life and give her some rules (only 5 calls a day then only answer every 5th call she makes or once every 3-5 hours, etc.).
Make it as easy as you can for yourself and try not to let anything "crazy" she says affect you; you know if you've lied, cheated, stolen, etc. and you haven't! Literally don't let it affect you. She's going to get ill and die and that's not going to be your fault and there really isn't anything you personally can do about it. She doesn't realize she's being such a pain and probably doesn't feel unhappy in a way you do (no guilt or self-doubt) so just ride on top of that. The assisted living place is caring for her the best they can (you all can check on that routinely) and that's all you can do!
Still, I realize it will probably be a rough several years while she is in your life. I use to get my stepmother from the assisted living center at first (she went downhill quickly) and bring her to my house and I'd be jumping at her beck and call like I was still a kid. My therapist was very good working with me about that and I felt very supported so I was able to learn to deal with her better and feel less anxious about the situation.
By all means, use your energy for your own family and new business. Your child (and husband) need you more than your mother-in-law does.