My mother is 71, still reasonably fit and healthy, and has just sold her home in an isolated area of another state to come and live with me, my husband and 2 year old son, while we build a granny flat for her. The plan was to have a separate dwelling ready before she moved in but her house sold unexpectedly soon and so she'll be living with us next week. She wants to contribute by helping with childcare and is expecting (but probably not really) to help out financially but I'm not sure how to work it out. I don't feel 100% okay about leaving her with my son for long periods as she can be easily distracted and doesn't pre-empt his hunger so I normally either have to pre-prepare meals for him (and her), or 'study' at home and inevitably cook for them both while I am supposed to be studying. So, I don't feel I should 'pay' her what I would pay a professional childcare (I wouldn't get government rebates for her care either) but I don't want to take advantage of her either. we have tried to discuss payment of the granny flat build but she seems to forget any suggestions other than her own desire to pay for it and 'own' it. Whereas my husband and I will always own the land, hope that it will be an investment in the long term, and therefore want to borrow the money to build it from her, and deduct an amount from those repayments to cover our costs. Also any ideas on how to set boundaries while she is in our main home would be appreciated: she has no wish for her privacy herself and doesn't understand that need in others, she is a hoarder and I am a minimalist, and she doesn't stop talking for much of the day, and kind of wants to do anything we do. She is so used to living on her own (she was a single mother all our lives, and my brother and I have been living independently of her for 20 years), that she 'forgets' to offer to pay the bill if we ever eat out together, doesn't volunteer to cook for us and I feel she frequently takes advantage of other people's hospitality... in spite of all this she is a very loving, fun and committed grandmother, and she and I are very close. I know it is not ideal for our relationship for her to live with me but she doesn't really have any other long term options. The money she got for her house wouldn't be enough to buy or rent anywhere else.
Even though 70 year old is young in today's world, I know I have half the energy I had when I was 35 or 40. It just comes with age, and with menopause.
And forget lifting heavy things. Back when I was younger, I could lift just about anything... I could rearrange a room all by myself. Not any more. Now grocery bags have become a real challenge, and those bags aren't squirming like a toddler.
If you have current babysitter, don't give that up. Hate to see you lose a good babysitter or a spot in a day care.... only to find that after Mom's first day of childcare she is so exhausted she can't get out of the bed the next day, or she is dozing off the next day while watching your son.
Now, maybe Mom could handle everything with a breeze, but it is something to think about.
What you have described doing, is full of complex issues, as FreqFlyer noted. I'd consult with an attorney who focuses on Elder Law and Real Estate law. There are unique issues that can arise when a person owns a building that is located on land that is titled to someone else. It could cause some horrible issues if one day your mom needs to apply for Medicaid. Or what if you need to sell and she doesn't. There are many scenarios that could prove a nightmare. The rules are complex, but, I'd seek advice from a professional on how to avoid obstacles before you or she invests a lot of money in her flat. (Are you in the US? If not, there are still likely legal issues that I'd explore, regardless of the country.)
Other things that stand out in your post are how many trouble signs you see with your mom. How much time have you spent in her home observing her behavior in the last 12 months. The things you describe such as, Forgetting things, not being attentive, talking a lot, no need for privacy, hoarding, etc. These are major red flags that signal you are inviting challenges. I would not leave a small child alone in the care of a person who is not attentive and in fact, with anyone who has not proven themselves to be ultra responsible. I would suggest that toddler care may not be the best job for a senior in her 70's. Even in good health, daily care of a toddler requires a lot of mental and physical stamina. I would be aware that this might be overextending your mom's patience and endurance.
I'm not sure what alternative arrangement I'd make, but, it would likely include her getting her own place near by, but, with other people her age, so she can be social and engage in activities with her own friends. I'd read a lot of posts on this site, about how family members in similar situations end up feeling desperate due to the enormous change in their lives and not for the better when they have a senior family member move in who has their own way of doing things. You know what they say about fish and house guests. If funds are an issue, I'd seek out programs that she may be entitled to.
I'd try to set it up so your child can enjoy wonderful times with grandmother, but, without it disrupting your household due to her issues.
Having Mom help with the financing of the granny flat could become complex, if for some reason Mom has a major health issue, runs out of her own money, and needs to go onto Medicaid. If Medicaid notices that Mom had help pay for the addition, within the 5 year look back, that could become a major stumbling block. It might be better to have Mom sign a Lease and she pay rent, and you keep copies of her checks for 5 years. Best to seek the advice of an Elder Law Attorney.
Now, with Mom being so young, she could live with you for the next 25 years. And if she helped pay for that addition, she won't want to leave the flat when the time comes where she needs a higher level of care.