These days mother-in-law apartments are almost anything but that. Father, son or daughter-in-law, grandparents or grandchildren, more and more extended families are sharing living quarters.
It used to be that Mother-in-law apartments were considered just that, an entity close to, yet separate from the rest of the home. They were often built above the garage. Beside keeping costs down, (building on an existing foundation) and giving the tenant personal and private space, it can be a terrific way to generate some cash flow. Renting the space out to students could fund your own children’s education.
That said, attaching a mother-in-law suite or creating it within a home has its advantages, too; to be within calling distance for starters. If there are any kind of special needs, such as floor plans for wheel chair access, a need for a frequently used bathroom so the rest of the house is not disturbed or just the liberty of having a separate entrance, convenience alone makes the idea worth exploring.
Clever designing strategy, like using the foyers that join house to the mother-in-law suite, can be created so seamlessly and gracefully you would never know they were not part of the original house plan.
There are no laws that say you must build out or up. Basements can be re-designed with these separate living quarters. The standard mother-in-law suite will neatly contain enough space for sleeping, a kitchenette, a place to dine, couch/TV area, and bathroom.
By the way, the newer term is multi-generational apartment.