Can he cancel his entire annual lease legally and I should look for another tenant? 

I am fully aware this is not a legal advice forum, but just looking to hear what other landlords have done in this situation. 

They allowed the tenants to breach their contract on multiple occasions.

I responded with a legal notice saying that I cannot be left vulnerable for legal reasons to someone doing structural repairs on my home, because in the event they are hurt, I can be sued.

If your wife’s family agrees, you could look into purchasing the home from the trust, possibly before it enters probate, which could save time and legal headaches.Reducing Closing Costs: One way to reduce closing costs is to negotiate a private sale among family members, which might save on agent commissions and some taxes.

At the start they performed PM duties but sub contracted out construction  and brokerage.

I'm a long time professional property manager and I'm not afraid to deal with delinquency or other legal matters myself, so I only pay for the services I want, like screenings and the tenant payment portal. 

They will also contact you if any repairs exceed $200 (I'm sure the threshold is negotiable), but will otherwise just take care of it (with their team, or your own if you have folks you prefer to use).I don't know what their contract actually states though so I'd want to look at that more closely.  

I would consult an attorney for contracts.  

Sometimes these insurance contracts come in legal sized paper- possibly a harbinger of what you'll need to do to collect fairly from them, But always expect them to perform completely on the things which are in their financial favor.