Hello,
1) First of all your wife does not have any right in your property automatically as you put it and therefore she does not have to surrender her rights in favour of the children.If you die with out a Will wife will have an equal share along with your children and your mother.
2) As long as you are alive it is your responsibility to look after the needs of your wife and as such you have made provisions to do so.
3) Your decision to rent the house can not be disputed by any one as it is your absolute right.
4) She can not occupy any house that is owned by you as long as you are providing her accommodation in your house.
5) Do not be intimidated by the fact that her father is a lawyer.a lawyer can not get away with doing anything unlawful.