Elder financial abuse is a phenomenon that may be present in all environments and in different forms. The impact of elder financial abuse often makes life difficult for those who are victims of it.
Since financial abuse can take different forms, this article covers one of them: emotional blackmail. The article presents some typical examples of situations that are encountered and provides sound advice to avoid giving in to demands from your loved ones.
What is emotional blackmail?
Emotional blackmail occurs when someone, usually a family member or someone close to you, tries to take advantage of your vulnerability to get money or things from you. To achieve their own ends, such a person is ready to manipulate your feelings or your fear or guilt, and may sometimes even resort to thinly veiled threats.
$20,000 to continue to see her grandchildren: the case of Mrs. Goodwill*
Mrs. Goodwill is a proud grandmother who adores her grandchildren. She already has 2 grandchildren and just found out that her daughter is expecting a third child. During a virtual meeting with her Desjardins advisor, Mrs. Goodwill spoke to him about how the good news was affecting the family. Her daughter told her that with the new baby’s arrival, she was looking to purchase a larger home. She would need to borrow $20,000 for the down payment.
Family values are very important to Mrs. Goodwill and her husband, and they would very much like to help their daughter and her husband by lending them the money. In speaking openly with her daughter, Mrs. Goodwill still expressed reservations as to their ability to repay the loan, as well as their willingness to even do so. Her daughter then became angry. She said that if Mrs. Goodwill and her husband didn’t help them by “lending” them the amount they were asking for, it was because they didn’t really love their grandchildren.
That’s a typical example of emotional blackmail. Mrs. Goodwill’s daughter is putting pressure on her mother to get the money she needs, and to do so, she doesn’t hesitate to put into question the emotional ties that bind them.
The advice that Mrs. Goodwill’s Desjardins advisor gave her…
After saying that he understood how she felt, Mrs. Goodwill’s advisor reminded her that it was her money and that she could manage it in any way she wished. He then added that the decision to help a family member was hers and that refusing to do so in no way diminished her affection for that person.
He then gave her some advice in the event that she should agree to lend her daughter the money, such as preparing a detailed agreement in writing specifying the amount of the loan and the repayment terms. This would prevent any misunderstandings and would make it clear that the money was a loan… and not a gift.
Beware of these examples of emotional blackmail!
- Your only son informs you that his business isn’t doing well and asks you to sign a loan application for $250,000 to refinance his home. He mentions that he has to act quickly and that all you need to do is go to the bank and sign the papers, because without your help he’s going to lose everything. He’ll have to move and will no longer be able to visit you much.
- You’re having a conversation with your hairdresser that you’ve been with for the past 20 years. Since she knows that you have money, she mentions that she’s having financial problems and is wondering whether you could lend her some more money, while making you feel that if you don’t, she’ll no longer want to style your hair.
- You live alone in an apartment and your sister comes to visit you from time to time to also take care of your finances. Without consulting you, she decides to purchase a new car for herself with your money, whereas you don’t even have a driver’s licence. In this way, she’ll be able to visit you more often.
7 tips to protect yourself from emotional blackmail
- Before lending or giving any money to a family member, take the time to think about it and ask an impartial person for their opinion so that you can make an informed decision.
- Draw up an acknowledgement of debt in writing before a witness before finalizing a money loan, while making sure to include as many details as possible (e.g. amount, repayment terms, interest rate), so that it’s clear that it’s a loan and not a gift.
- If necessary, ask someone you trust, such as a legal advisor or notary, for help to review the contract before you sign it.
- If you want to give a large amount of money to a family member as a gift, make sure to formalize the transaction to prevent any misunderstandings on the part of family members and others. Writing down your intentions clearly along with the origin of the gift will make the gift and your intentions official.
- To leave a trail, it would be more beneficial for you to make the transfer of funds using a method of payment that is easy to trace, such as a cheque or bank transfer, and avoid giving cash.
- Never give in to pressure. Ask questions to fully understand the situation.
- Discuss any aspect of your financial situation that is creating a problem for you with a trusted person, and ask for advice.
Feeling free to financially contribute to family members’ needs
Loaning or giving away money is first and foremost a personal decision. The important thing is to feel free to make an informed decision. Reflecting and planning, whether for a loan or a gift of money, are a key step in managing your wealth. Talk to your advisor, who can help you determine the impact of such decisions.