it does indeed sound like this child has been 'trained' to engage in provocative, disruptive and aggressive behavior. I find that over indulged children become very anxious, and the anxiety comes out in the form of undesirable behavior. Kids who hit or soil themselves are not happy, they feel out of control and often angry at the adults for not giving them the limits they need to feel safe.
Your mother in law is continuing to reinforce these behaviors, which makes it very likely that they will continue (your husband is also making it worse if he is not helping you in your attempts to manage this behavior). I am concerned that you seem to have been left with the total responsibility for this little boy, which is not fair to you with a new baby coming. I strongly recommend your husband commit to working with you to help this little boy.
In terms of managing the behavior, the most effective means is to teach him new ways of handling his angry/unhappy/negative feelings. Right now his repertoire consists of unwanted behaviors, so he will need to learn new ways. The best way to teach new behaviors is to give him reinforcement (praise, affection, privileges) when he does something you want (or avoids doing something you don' t want).
Spanking, punishment and giving in do not solve the problem, because they make the situation worse over time. Spanking and hitting do stop the behavior in the moment, but they worsen children's aggressive behavior long term. Kids who are spanked or hit are more likely to be aggressive to siblings, and you can not afford to have a physically aggressive child near your defenseless baby, so by all means stop all corporal punishment and enforce a 'no hitting' policy for everyone in the household.
If you can get some behavioral therapy, I strongly recommend you and your husband start working with a professional as soon as possible. Ask for parent management training, parent effectiveness training or training in behavior modification (all the same general approach). I would not recommend individual play therapy for him until after you have the behavior under control--thats the first priority. I think you have so much work to do with this child that you need a professional to help. Your pediatrician can refer you. If you can not access therapy, or while you are waiting to do so, I recommend the books The Kazdin Method by Alan Kazdin, Your Defiant Child by Russell Barkley, and How to Talk so Kids will Listen and Listen so kids will Talk by Adele Faber.
The issue that we are having now is that he chooses to poop and/or pee in his pants when he is angry with us. If he gets into trouble for something, he will promptly poop or pee in his pants. When I ask him "Why?" he answers that he did it because he is mad at us.
I understand that he is at a pretty egocentric age... and that he has gone through quite a few changes in the past year and a half. He has people expecting things of him now, such as asking instead of demanding. Not hitting. He didn't even start dressing or undressing himself until I showed him how this past year (not even socks). Everything was a whiny "I can't" or "I don't know how." I would patiently tell him "Well, let me show you how."
What I don't understand is why he is putting it together in his head that pooping or peeing in his pants is somehow punishing us. We have tried reasoning with him, taking things away, rewarding for good days, spanking, talking, time-outs, no privileges... Nothing seems to be working. I have tried having him clean up his own pants and messes (with proper supervision and hand-washing)... He deplores the idea of touching his own messes. That doesn't work either.
I am terrified that the arrival of the new baby is going to cause major regression. Hitting, potty-training, etc. etc. He has already stated that he does not want to share his grandma with the new baby. That is his grandma... and she can't hold the baby. Am I wrong in thinking that her over-indulgent, lack of any rules, boundaries or discipline style has been a major cause of our frustrations?
When we tell her about the things that he does she scoops him up, hugs him and says "Oh... the poor baby. He is just so needy..." She will then within the next day or two come to pick him up to do something special for him...
Have you seen a counselor?
wow I think you just basically described what I'm going thru right now. My husband and I took permanent guardianship of our niece about 7mo ago. She'll be 4 soon. While we expected a hard battle I'm really starting to come to the end of my rope. She never had any boundaries, rules, structure you name it. She was rewarded for bad behavior, coddled, etc. Recently she has decided to disagree with everything we say, total regression in the toilet training and will sit and cry non-stop. Her mother has some serious mental issues and father wasn't much better. I'm concerned at how early those issues will show in a child. We are visiting the pediatrician tomorrow for the potty training issues (just to rule out bladder infections etc) and am seriously considering a child psychologist or something to help. We are really running out of patience here.... Good luck and please let me know if you find anything that works!