I'm sure you've heard many similar stories. Mom is 83, and when she became unable to take care of her house any more we convinced her to move in next door to us. We did the actual moving across country for her, tough since she is a shopaholic and has three of everything ever manufactured.
It's gone downhill since then. One of my twenty something sons lives in her home and that is a great help to me since he regulates her pain meds and does her shopping. Another son's girlfriend cleans her and her husband's bedrooms and bathrooms. I cook for the eight adults in the two homes every night, and I'm a pretty good cook.
Mom complains about everyone and everything. She has an older sister who loves her, and every day she tells me how her sister is a mean drunk. That is an exaggeration, and every time she says it it grates my nerves. She's asked me to plant trees so our horrible neighbor won't spy on us. The neighbor is a sweet lady and too busy to care what we do, and I don't know why mom is so hateful. Mom has always been overweight, but due to bad health she's a lot thinner. Our best friends were visiting and she asked the overweight son if he planned to do something about it. Anyone who mentioned her weight in the past was automatically on her hate list. She threatens to kick out my son since he runs the AC in her house (we're in Florida) and says she has icicles hanging off her nose. He keeps it at 75.
Today is one son's birthday, and he suggested we grill steaks at home instead of going out so grandma can join in on the birthday dinner (she only likes to go out for lunch). I mentioned this to her and she made a sour face. I asked her what was wrong, and she said my son always ruins steak. He tried grilling them steak once when he was a teenager, years ago, and he overcooked them. She brings this up every time we have steak (maybe 2x a year). About a year ago I talked to her about trying to be kinder to people, and she turned it around and said I was bullying her and turned on the tears.
I feel bad about staying away from her, but whenever I go over to chat, she starts badmouthing someone. I'm sure she notices people avoid her, but I can't tell her why or she'll try to make herself the victim.
I hear her as so much noise now -- kind of like someone playing with a noise maker on Halloween. If I say anything at all, it is just to put in a positive word. If she says someone is ugly, I say I think they are very pretty. It works without causing argument. My opinions don't seem to phase her one way or the other.
Now that she is getting older, she doesn't talk much about other people anymore. I rather miss it, since her main conversation now is that she needs to go to the hospital and I don't care if she dies. (And no, she doesn't need to go to the hospital. I think she has become terribly afraid of dying.)
I agree with Babalou about having her medically evaluated, especially if this behavior is new -- and it wouldn't hurt even if it isn't new.
But if this is how she has always been, I'd ask "what did you expect?"
It sounds like she has the best of all worlds. And yet all she can do is complain. I think you are doing the right thing to limit your exposure. Visit. When she starts in on the negative carping, say "Mom I'm just not in the mood for all that negativity today. I'll come back later and maybe we can have a pleasant talk." Then leave. I think GardenArtist has the right idea about that!
As for "I can't tell her why or she'll try to make herself the victim" -- do indeed tell her why, at least for yourself. "I just don't like to listen to bad things about other people," "I didn't get much sleep last night and I don't have patience today to listen about problems I can't fix," "If you're cold, let's find your pretty sweater with the pansies or that nice navy one. But please don't talk bad about my son. I won't listen to it." So then she makes herself out to be the victim. So what?
You owe some loyalty to you son and your aunt and your neighbor. Minimize your contact with her when she is being nasty.
Meanwhile, do try to have her checked out medically.
It's hard, but start backing off and follow your instincts to stay away from her, and leave when she starts the complaints. I do feel sorry for your son; he's right in the midst of it.