Dear Moneyist,
My mother has cancer and she has been slowly deteriorating physically, but her mind has remained sharp. Both of my brothers have already passed and her only heirs are me, my two children and my nephew.
None of the family lives in the town where my mother lives, but there is a woman (Tina) who has worked for my mother for decades and as she’s gotten older. Tina has been so unbelievably helpful to her. She’s taken her to doctor’s appointments and helped around the house and countless other things in times when we were unable to be there.
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Around a year ago my mother and I set up a will with an attorney, but she did not want to “complicate” things and decided that she would just allow me to split everything up and determine who gets what.
Last week, mom had a bad fall and hit her head. Since then, she’s had trouble talking and understanding others. She’s too weak to sit up and she’s declining rapidly. We fear the end is very soon. My mother loves Tina very much and I know that she would want me to include Tina in her will, but I don’t know how to decide what to leave her.
Dalton
Dear Dalton,
Your mother should be of sound mind when she’s making adjustments to her will. From what you say, it sounds like it’s too late for that now. This is a good lesson to never leave anything to chance and always be specific (and explicit) when making a will. Your mother (and Tina) are fortunate that you want to ensure your mother’s wishes are honored, and you want to do the right thing by Tina. The problem in situations like this usually involves other people. In this case, it would certainly help if the other legal heirs were happy to share their inheritance.
You have several choices: You can give Tina a lump sum or you can continue to employ her with the same or income, or both. For 2018, the annual gift tax exclusion is $15,000, so if you are planning to give Tina more than that as a one-off gift, stagger it. How much should you give her? It depends on the size of your mother’s estate and/or what size gift would make a difference to Tina’s life. Do you want to thank her for many years of service or make sure she has financial security in her remaining years, or both? I can’t give you a figure without knowing the size of the estate.
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If you are executor, however, you have more power to make this decision. “Normally, the executor is given the ability to make gifts so the gift could be from the estate (if it remains open) and any taxable amount would be covered by the estate tax exclusion,” says Jim Todd, a client adviser with Mercer Advisors in Boulder, Col. “If the document grants the executor the ability to gift from the estate, that would seem to be the way to proceed. See how complicated things get when you don’t just plainly state how you want things handled?”
It is, indeed, a tricky situation. Find a balance between what makes you comfortable and what you believe your mother would have wanted. “On the one hand, you have no legal obligation to Tina,” Todd says. “On the other hand, Tina has been a great help to your mother and you obviously feel that you should show some appreciation for all her help.” Given the number of years Tina has worked for your mother, I’m sure she cares a great deal for your mother and will feel her loss when it comes. Naturally, she will be concerned about her own livelihood too.
No doubt, Tina has gone above and beyond the call of duty over these last decades. Good for your for not forgetting her.
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