SDol
My heart goes out to you. I can relate to all you mention - having experienced that kind of insanity in my family over the last 20+ years.
One of the things I figured out after a long and painful battle is that I was attached to having a particular kind of relationship with various members of my family, which was really just a fantasy of harmony I had created in my mind.
When I finally accepted each member of my family for who they are, the motivations that kept them (and me) trapped and accepted my own limitations, I was able to grieve the fact that I will simply not likely be able to achieve that fantasy.
So, maybe the rift is a good thing. If it creates some distance for you to ponder what role you can reasonably have with your family that might help and not hurt (you or them). In that way, you can at least construct relationships based in reality that protects your sanity, not enable them, and do the best you can for your niece.
It is very hard when kids are involved and since the parents are adults you are limited to what you can either reasonably do (have your niece visit, etc.) or the limits of the law (calling children's services, police, etc.).
Having spent a lot of money on my closest addict (my niece ), I came to notice that every time I spent money on some problem of hers, somehow she was able to take every good intention or action and turn it into something destructive. That is the nature of addiction. I did this for 15 years.
At one point (after I had her committed and she got pregnant) I resolved not to repeat the mistakes of the past, and to figure out what a proper role is for me. In that, I can relate to your husband. If spending money has not improved things, obviously, continuing that might not be the best approach.
I have noticed that when addicts are left to their own resources they either figure it out or they don't. I think that is why we continue to enable, we fear the worst - and it does sometimes happen.
In that, we are left with helplessness. Step one of the 12 steps - We admitted we were powerless.
So I might suggest thinking about going to some meetings where other people share your challenge (Alanon, Naranon, CoDA). It is a very sad thing to watch family members self-destruct, others enable and a child struggle. There are things for you to do and things you should not do, and in the insanity of addiction, its hard to discern the difference. Connecting with others who have walked this path can help discernment.
I guess one last thing. My experience is that there are many levels of letting go. Each progressive step of letting go has its challenges and rewards, risks and potential. For me, praying for the knowledge of my Higher Power's will and the power to carry it out made a huge difference. Maybe consider some quiet time to ponder what this situation is asking of you that is different from what you have done in the past or different than what you re-actively want to do.
When I have done this, I found that I was being asked to do some very scary things, but in the end, doing the opposite of what I wanted to do initially made all the difference in a positive way.
Prayers you gain the clarity you need to find some peace in all this.