In my experience, most bad GMs are honest and well-intentioned, but they missed the memo somewhere that I'm supposed to be playing a character who lives within the world. Instead, they treat PCs like the protagonists of cheap novels, where nobody is allowed to have any character detail without it being relevant to the plot. If you say that your character has a sister, then some GMs feels obligated to make her part of the narrative, whether or not it makes sense. While I agree that it's definitely overboard to have a rule that the GM can't touch something, such a rule could still serve as a reasonable reminder to those certain GMs who would otherwise go out of their way to mess with you.
Although, given the example in question, it sounds like the type of game where the GM is supposed to protagonize the PCs. And if you have a game where the GM is supposed to treat it like a story, then it's not that much more ridiculous to collaborate on what the plot points are supposed to be.