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LW has done us all an enormous favor by describing her situation so clearly and forcefully. I imagine we all have at least one ticking time bomb of a psychopathic or evil or just plain screwed up relative whose dysfunction threatens to explode and take out the nearest lonely gullible do-gooder in the family. It behooves everyone to think through the likely scenarios and head them off before the crisis comes to a head. Perhaps talking with your mother about all this before her sister got her clutches into her (because face it, it’s the sort of thing you can see coming from years away) would have strengthened her ability to resist. Or perhaps not, but at least steps could have been taken to mitigate the damage.
Another possibility for disasters that spill over onto everyone else is the second marriage. Whether it’s Anna Nicole preying on your widowed father or your delusional sister whose fiancé has children with two other women, no job prospects, and a gambling habit, you will find that talking sense to a person in love is the definition of frustrating. When either party has been married before or has children from a prior relationship, then the happy couple’s closest relatives should speak up and make a strong case for a prenup, backed up with the promise not to help out in times of need unless there is evidence that sound advice will be heeded.. These aren’t fun conversations, but I think they are essential.
Oh, and LW should stop loaning money to Mom and should suggest that Mom give up her apartment and move into her home. If Mom refuses, then now is the time to ask her for any family heirlooms that she intends to pass on to her own children. Say this is for safeguarding purposes, which it is. Otherwise, don't expect the family silver to still be there when Mom dies. Or the family photographs, either, if Goneril or Lenny has a vindictive streak.