OP has already stated that the grandparents are nowhere near the lifetime estate limit. So I hold to my suggestion that for this family, sitting down for a comprehensive financial plan, estate plan, taking into account other heirs, cousins, interested parties, etc. is essential. And that filling out form 709 is likely not complicated enough to precipitate an urgent “OMG, grandma has to do her gifting in the next 10 days” without that sit-down.
Lots and lots of variables in the scenario that the OP has presented. Nobody wants to have their parents homeless. Nobody wants a fight with their siblings or a nephew over assets once those parents are gone. Nobody wants to lose their house in a foreclosure, AND have their parents homeless AND a fight with a nephew.
And yet it happens all the time. To really nice people who only wanted to do the right thing, but didn’t get sound advice on the 20 things that could go wrong. And if nothing goes wrong, the OP has structured the asset/living situation in a way that gives everyone piece of mind, is tax efficient, AND protects everyone going forward.