OJ, I don't want to butt in but I do know about intestacy (dying without a Will) as I was a private client laawyer before becoming a SAHM - I thought that you might like the position clarifying - if you died then, as you have no spouse, your assets would be split equally between your children. Steve's parents wouldn't get anything. A Will does make the sorting out of the estate much quicker and easier, however, so it is very sensible to get one. Please get it done professionally as it is very easy to invalidate a Will which can cuase a LOT of problems.
For you, however, the biggest issue, I imagine is what would happen regarding guardianship of your children - for that reason it is very important that you do make a Will asap, and nominate guardians. Please be aware though that it is possible for people to challenge guardianship clauses in Wills, after you die (by going to the Family Court) - so to make doubly sure that your wishes are followed - I would also advise you to write a letter, addressed "to my executors and whosoever else it may concern", explaining your reasons behind appointing the guardians that you choose, and also why you have not appointed Steve's parents, etc. That letter could be kept with your Will and then be presented in the case that Steve's parents (or anyone else) tried to challenge your wishes.
Again, please, please get the Will drawn up properly, and explain all your concerns to the solicitor (he/she should hopefully put them down in his/her file note - another useful piece of info).
I really don't want to upset you in any way, I just want you to do everything that you can to make sure that your wishes are carried out. Please take professional advice on this as soon as you feel able to do so, and get your wishes formally drawn up in a Will.
My thoughts are with you all. Please feel free to CAT me if you'd like any further help on this, or any aspect of sorting out Steve's affairs.