Talk to the Senior Center in the town your In Laws live in and if need be, make an appointment to meet up with them.
Tell them your In Laws need senior housing, discuss income so they can determine if they are eligible. If so, and if they steer you to some apartments, take some time off (you and Hub) go there and look at some of them and find the best that you can.
In the mean time find out all the things they are eligible for. Meals on wheels, Food Stamps (Snap), subsidized housing costs, some states will help with paying Part B Medicare, transportation to shopping, doctors and to Senior Center for activities. Some senior centers provide transportation for free or for maybe $2 per trip. In my town there are two housing complexes for seniors. The senior center bus picks up the seniors every day to different grocery stores and for doctor appointments.
I would get all this on paper. One page for each benefit.
(1) Such as Meals on Wheels: costs, how many days per week they will deliver, choices.
(2) Transportation by senior center: where they take the seniors, days, times, costs, etc.
(3) Food Stamps (Snap): How much per month. Make suggestions on what foods they should buy with that money such as canned tuna, eggs, milk, beans, cheese, hamburger, etc. (WIC has suggested lists of foods for people in need).
(4) Senior centers also provides low cost lunches that could be part of the lists of things. Get the Senior Center Newsletter to show them.
(5) Senior centers provide some social activities and maybe they need to get out to stop their whining.
(6) Contact a realtor to see about selling the house and if they will walk away with anything or not.
(7) Put together a final tally sheet to show the savings with no more real estate taxes, mortgage payments and lowered costs of housing, food, transportation and house insurance.
(8) Finally, make an appointment to show them a senior unit that you have already looked at and think is nice.
You know they are not going to cooperate but if you put together a formal plan on paper showing the benefits and savings, by some chance they might come around. Especially when you tell them the buck is stopping on the current lifestyle. Also, maybe you could pay some of their expenses but it might be a lot less with this new lifestyle. (NO cigs or lottos). Your Hub has to get on board with this. Get most of this information together to present to your Hub. Also, if they do get on board with this new living arrangement, I would NOT hand them cash. If they need money ask what it is for and ask to see the bill and tell them you will pay it FOR them. There have been enough comments on what to do. Now it is up to you and your Hub to start working on a plan. I do wish you luck. It is a terrible thing to be held hostage.
Your Hub has to get on board with this and speak up and tell them