I guess we are worried because we have received some unpleasant letters from his Grandmother telling us we are raising our children in hate and we are hateful people and that we are going to have our children hate us for not having these grandparents in our lives.
You and your husband know this is FOG(Fear, Obligation, Guilt) or emotional blackmail, right?
How old are your kids? Does your Husband's family live nearby? Do your kids see your parents?
My thought is if the kids are very young going into everything about Grandma might not be necessary for now. If your Husband's family lives out of State for example maybe for now just tell them the travel is too far. Not necessarily lying but just kicking the elephant in the room down the road a ways until the kids are older.
If your kids are older I would be honest and let them know that Grandma has emotional problems/is mentally ill and it is healthier for your family not to visit with her.
My dad had a mentally ill sister, we just didn't visit her. We visited his other 2 sisters and their families but not his oldest sister. I, as a kid didn't think anything about it just thought she lived far away so we couldn't visit. Later when I was older I found out more about my aunt. She had mental health issues, then her husband was killed in a car crash (trauma) , she was seeing multiple doctors on multiple medications, and was a mess. My dad at one point got her all straightened out and got assistance for her and she just went back to her old ways. She was unwilling or unable to change and my dad was unwilling to continue a relationship with her as she was. As a teen I understood why he didn't see his sister, she would have been a bottomless pit of care-taking for my dad. He had is own family to care for and she was an adult so he did a hard thing and let her take care of herself which she did even if it wasn't the way my dad would have liked.
Panda39