T.K.
Well, It's the MILs family. So, you can't really make the call to cut them out of all family gatherings, especially ones at her house. Sometimes you are going to have to suck it up. However, if you are the hostess or co-hostess, you do have the ability to control the guest list for that event. For things like the upcoming event, I would tell MIL - "we want to have a small, intimate family dinner with just the immediates, due to ...space, availability, budget," whatever reasons you can use to justify. Maybe you could try..."We really just want to have a more intimate dinner to honor you, just us kids" or something to that affect. That makes it sound more like you are honoring her, rather than dissing her family.