It's a good idea to put an in-law suite in a part of the house that allows for privacy. This may be in a finished basement or on another level of the house away from children and others. If your home has only one level you put the suite on the side of the house opposite of where the other main rooms are located.
Think about including at least a bathroom with a shower and/or bathtub either within the suite or right next to it. This will provide in-laws with their own bathroom where they can wash and groom without being interrupted by other family members. This will also eliminate the problem of them having to wait for a shared bathroom to become available if it's in use by others. If you have the space you might include a kitchen and laundry room.
An in-law suite should be large enough for at least bedroom furniture to fit including a bed and dresser while leaving enough space to move around comfortably without bumping into furniture. If the suite is an entire living space, be sure to make it large enough to fit other items such as a sofa, dining area and a television.
Neutral colors are a good idea to use when decorating the suite unless in-laws have asked for a specific color scheme. Neutral tones such as tans, browns, white and black can be easily accented with other colors if in-laws want to add their own design items.