Giving away one's assets in this manner is known as 'deprivation of capital' and the local authority may decide to treat it as if the asset hasn't been given away at all. The thing in her favour is the length of time ago this happened.
There is a fact sheet here about it.
http://www.firststopc...ds/resources/2338.pdf
Giving the asset to you but still living in it won't work with HMRC for IHT purposes - it is known as a 'gift with reservation' and will very likely result in the asset being treated as if it had never been given away for IHT purposes, when the time eventually comes.