When a party to a contract passes, their estate is still obligated to perform. 

I’m looking for advice on how to setup a structured partnership with my in-laws so that both parties achieve their goals.

Their policy may or may not require a certified 3rd party appraisal for any taxable event such as a distribution in kind.Current valuation is all that matters here. 

I’m no great fan of the Republic party “agenda”, BUT, what choice do I have? 

The jadu would most likely have minimal value or be discounted since of it's owner occupied requirement and therefore, not having the same rights as a traditional 6-unit property.As to the lending part - I am not sure how lenders are going to look at this, since it does now fall under the commercial definition.As to your specific question: It might increase the property value.

Meanwhile, I'm talking to this guy and he said in his other property, the little old lady paying long term rent, moved out, and within a week, the neighborhood people had broken in, had a party, broke most of his doors, stolen all his copper and HVAC, etc.

Buying a modular or mobile home first and then next move into a single family.Buying a home out of state only having to put 10% down can be used as a short term rental immediately then on the second year you refinance and transition into a investment you only need 85% LTV.The tough part is when a buyer purchases a single family home and then wants to buy a 2-4 unit and say they want to live in a unit.

What other parties did you involve - lawyer, title company, etc.?

You could write a simple statement and have all parties sign and date:"Landlord and Tenant agree to extend this lease with a new termination date of June 30, 2025."

Closing costs on seller carried transaction are marginal, payments are collected and preferably administered by a third party and qualifying or documentation required is discretionary to the seller.