Dear Liz: Please consider mentioning employers who haven’t forgotten long-time employees in their estate planning. Caregivers and domestic workers may work for families, the elderly or seriously ill patients for decades. When there is a death, the estate or family members rarely remember these workers who feel their effort must have meant very little not to have been acknowledged in some small way. I did hear about an employer who put away $10,000 a year in a savings account for an hourly paid employee who retired after 30 years of service. By the way, the employee never asked for anything. She was just grateful to have been of service for so many years.
Answer: You’re right that a bequest could be a meaningful acknowledgment of a longtime domestic employee’s faithful service. Such bequests also can trigger huge family fights, accusations of undue influence and court challenges that drag on for years.
The size of the bequest, the size of the estate and the contentiousness of the family are all factors that need to be considered. Also keep in mind that while most bequests aren’t taxable, bequests from an employer often are since the IRS views such transfers as compensation. Anyone contemplating including an employee in their will would be wise to consult an estate planning attorney as well as a tax pro.