I would have another chat with her and let her know that you understand her stresses and that you have been doing everything in your power to make things work. With that said though she and her husband need to be on the same page or it just won't work.

Give them a time line if you want or give them a months notice. You have clearly already made up your mind, her life stresses are not yours to work out.

Don't let her guilt you into keeping her children.

I was in your situation and I ended up recommending Montessori school for the oldest and I kept the baby in my care. That older child clearly needs a fully structured environment with peers not younger children to bully.