Need Advice on handling a milfh

Hi guys, I need advice, this is actually a grandmother not a mother, to my husband. My relationship with her actually started off on a good foot, some red flags here and there I just mostly thought she just liked things a certain way, and would continue on with my day. I later got pregnant and we got super close she would take me to my appointments for my pregnancy and everything seemed great until I had my baby.. she's made my life he'll since I've had my baby, I've heard her multiple times telling my child that she was his mother, she refuses to not smoke around them, and basically disregards any boundaries we set and has meltdowns if she's confronted, she will get all my husband's family involved when I stand up for myself.. I feel so beaten down, my husband grew up without a mom so I understand his love for her but this is getting out of hand.. she demands my child from me and has threatened to come to our house if I distance myself.. we live far away from any police if that were to happen.. any advice would be appreciated..