Elizabeth and John Edwards are separated

After meeting the child that rocked her 32-year marriage to one-time presidential candidate John Edwards, Elizabeth Edwards has had enough.

“She said, ‘I’ve had it. I can't do this. I want my life back,’” her sister, Nancy Anania, tells PEOPLE in the latest cover story. 

The couple now occupy separate residences; she in their Chapel Hill, N.C., mansion, while he divides time between an annex they call “the barn” and their beach house 160 miles away. Elizabeth, who is still undergoing cancer treatment, has had divorce papers at the ready for a year. Whether or not she files likely depends on her health, a source says.

Last December, Elizabeth met the 23-month-old Frances Quinn Hunter — the baby John fathered with mistress Rielle Hunter — in a mediated visit at a North Carolina hotel.

“She gave it a lot of thought, wrapped up a bunch of Christmas presents, took them to the baby and was so pleased when Quinn made a beeline to the toy carriage and doll,” Anania tells PEOPLE.  “She even said to Quinn, ‘Go stand next to Daddy.’  And she took a picture. 

“I don’t know how she could do that,” she added.  “She just has a big heart.”

But the tenderness of that forgiving family portrait belies today’s reality: Elizabeth has called it quits, and John, 56, has moved out.  

But why now, three years after he first confessed the affair to his wife? Michael Cucchiara, a confidant of John Edwards, tells PEOPLE, “John feels like, ‘I can’t live with you checking my cell phone, asking who I was with, where I went. That’s not how I want to live the rest of my life.’  I think they realized she still doesn’t trust him and therefore they shouldn’t live together until she can.”