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I handle Katie with the utmost patience, and I find that my children do the same. It has been two years that we all live together, and my DD has accepted her grandmother the way she is. There is still bonding. Katie feels a great sense of being needed with her granddaughter so near. She often "puts her to bed" by going through the bedtime ritual, often with my DD telling her what is next.
It is all rather endearing. Try to find the small gratitudes and focus on the small life events that have a big impact on the young and the old alike. It is our "new normal" way in the household.
On the other hand, my adult son had the most precious of relationships with his grandmother. He has experienced her decline. I have talked him through how to communicate and interact with Katie. He did mourn the loss of their relationship, and although he relates to her on a nurturing level, he misses the days when they had fun together like going to visit grandma.