@Sierra02 - I'm so sorry to hear your recent discovery about your mother-in-law and her battle with lupus. It can be unforgiving and frightening disease indeed.
However as far as your children are concerned only about ten percent of those who have lupus have a family history of it or a family member who might get it.
Research is still being conducted in this area so there's really no scientific proof as of yet that lupus is hereditary. Some studies have shown that the risk of children inheriting lupus are far greater if the infected were a parent of the mother. That being your mother as opposed to your mother-in-law.