Normally what is on the deeds (or now the register of title) is indicative of both the legal ownership and beneficial ownership. Anyone seeking to show that the interests are different to the legal title has to prove it (Stack v Dowden). It sounds to me as FIL is sole owner of the property - unless there is an underlying trust deed. Putting your MIL on the deeds effectively involves a transfer of one half of the beneficial interest in the property to MIL - ie a gift. Is the land registered or unregistered since that may make a difference.
As FIL has lost capacity, the EPA will need to be registered before the Attorney can act. Even then the Attorney can only act in the best interests of the patient. You may have to make an application to the Legal Guardianship Office to have this transfer approved by the Court as the Attorney is effectively giving away half of the house to MIL.