If you borrow points from the August 2013 use year for use during your August 2012 use year, those borrowed points would need to be used during the 2012 use year, but any actual 2012 use year points remaining could be banked into the 2013 use year.
However, Member Services will not borrow points from the next use year until all current use year points are used for a reservation.
If you're talking about transferring points from another member into your MILs account, they would have no impact on her own points.