So every time I see MIL I'm pretty sure she manages to use the n word at least once. It makes me very uncomfortable so I try to change the topic as quickly as possible. She also has been known to use derogatory terms for gay/lesbian, although she is quite aware I am a big supporter of GLBT rights.
For example today we were discussing the recent break-in we had at our (soon to be ex) apartment. DH's theory is that is was some 18 or 19 year old who couldn't get someone to buy them alcohol since a few bottles of liquor were the only thing that was taken. MIL's instant response "It was probably some no good black n*****."
DH has said something about it a few times in the past and her response is always "It's not like I'm racist/homophobic or anything. It's just a word!"
We are hoping to start a family, and we have already had a discussion (that DH started) that it WILL NOT be ok for her to use those words around our children. And DH has even said that if she does, she will not be seeing them.
However I feel like it will be somewhat of a surprise attack if sometime down the road we end up having to limit her contact with her grandchild(ren) over an issue that we haven't put our foot down about before. Although DH has talked to her about it, it's never really been taken any further and obviously she doesn't think she is saying anything wrong.
DH's whole family lives in a small town when most people are very narrow minded when it comes to race, sexual orientation, and even gender (heaven forbid I have a career of my own out side of being barefoot and pg in the kitchen!). I know I cannot completely shield my future child(ren) from these points of view if they are to have any sort of relationship with his family, or survive in the real world overall. However, I feel it will be my right to keep them from regularly hearing such vulgar terms for other human beings.