Inlaw issues!

My Sister-in-law is struggling with some issues that has caused her to be mentally institutionalize do. She was gone for close to 4 of the last 5 months. My MIL is an enabler to her especially since my FIL passed away 18 months ago. Is it wrong that my husband and I have created a rule that our son (22mo) can't be around my SIL without my husband or myself supervision? We don't feel she would harm him but fear what he will observe. My husband also agrees his mother is not able to supervise the situation. Is this wrong of us?