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Now you need to set boundaries if she is going to stay.
This is a perfect time to have a heart to heart about behavior.
Being sick and old is not a free ticket to be mean and ugly. Tell her that she needs to stop with all the negativity and back biting of anyone not in the room. Give her the choice of staying or leaving, be nice or be gone, your choice mom.
By the way, I think that statement is a manipulation tactic.
Did your mother have a decently good relationship with her grandchildren in earlier years, before she got ill?
The sort of "stream of consciousness" that you get when people are old, ill and in declining spirits does not make for cheerful daytime listening, that's for sure. Do you think your mother, in her normal state of mind, would really mean what she's coming out with?
It may be, just thinking about neutrally, that there *would* be better options that won't utterly destroy your feelings towards your mother and wreck your peace of mind as time moves on to the end of her life. It isn't about a threat, or an ultimatum, or a contract of good behaviour, or anything like that; but what about having a good think about her needs, your needs, and the best way to accommodate everything that's important?
With caregivers and if she is Hospice eligible it might be doable.
Is a move to Assisted Living or if she also has memory problems a move to Memory Care a possibility?
Both of these options might give you both the break you need.
When I draw boundaries with my parents they always respond the same. We are going to move out, we are being too much of a bother, how dare you speak to us like that, we will get our own place, we are perfectly capable of living independently (they are not). I find it so aggravating, but mostly just ignore it. Mostly.
It's not easy and I can offer you any coping suggestions other than to ignore it. Walk away.
google Area Agency on Aging with your city and state. Call and ask for an assessment for your mom to give you an idea of what level care would best meet her needs.
This might help you and mom to see what her options are going forward. Again, no need to get upset. Just checking options. Her home would certainly be one, ALF etc could all be discussed.
Its a not so subtle message that you are serious about alternate housing for her and may give you some great ideas as to the resources available in your area.