I have a question that I can't seem to get an answer on. In November, 2012, my mother in law was diagnosed with Dementia. She lives with us now, since she can't be let alone. She is also diabetic, which is another reason she can't be left alone. Question: we take care of everything for her: food, clothes, meds, etc. Can we claim her as a dependent? She has a home that is now occupied by one of her sons. She has a vehicle that also being used by that son, but she pays the monthly note. This note takes all of her SS to pay for, another reason she's with us. I've been checking on this, but never get the same answer.
Also, you absolutely should stop paying on her car and use the money for your MIL's expenses. I'd sell the house, too, and look into a Medicaid-friendly annuity for your MIL. It could provide for her support while she's living with you and, if properly set up, would not disqualify her for Medicaid if she needs the nursing home.
I assume you've realized that, by living in his mother's house and having her pay for the car he drives, your brother-in-law is taking money that should be used to help support your MIL in your home. If he is not disabled himself (and if he is, then that's all the more reason to get to an attorney immediately), then he needs to start paying rent and he needs to buy the car or surrender it so it can be sold (or turned in, if it's a lease).
Please, go see an elder law attorney. S/he will not only help with the planning, she'll put things in perspective.
And as stated in this thread, the payments to the condo where she doesn't live and the car payment for the card to send drives, if mom had to go into a nursing home suddenly, during the five-year look back, Medicare/Medicaid would like we consider those monies a gift and there would be a weighting penalty for when payment would start to a nursing home.
Blessings.