How to divide father in law's property who died without Will equally?

There are two acts which govern intestate succession (without will) namely:

a. Hindu Succession Act
b. Indian Succession Act

In your case, both these Acts prescribe the same devolution of property. The property shall be divided equally amongst all 4 daughters i.e. 1/4th share each.

Now, as one daughter has expired, her share will be equally divided amongst her two children i.e. they will get 1/8th share each. It is immaterial with respect to the children of other daughters because as they are alive they themselves shall get 1/4th share each.

So as we can understand, you are the husband of one of the daughters who is not staying in the house. So your wife is entitled to 1/4th share of the property and she can file a suit for partition and permanent and mandatory injunction making the other two daughter and the children of the pre-deceased daughter a party to the suit.