Terry is Mitch Larsen's sister, and Rosie Larsen's aunt. She has a close relationship with her sister's family, and acts as a baby sitter of sorts for the Larsen kids. One October weekend, the Larsen family go camping for the exception of Rosie. During their trip, Rosie is murdered, and her body is discovered several days later. After Rosie's death, Terry makes Mitch feel guilty for not keeping in contact with her niece during the weekend. As the parents mourn the loss of their daughter, they begin to neglect their other two children Tommy and Denny, to which Terry becomes a mother-figure. Both she and Mitch want a better life for themselves, which is evidenced at the memorial service the Larsens hold for Rosie.
Michael Ames, a prominent Seattle man, enters with his wife and shakes hands with the family. Terry brightens and beams when he approaches her, but he coldly passes her up. Later, when Belko Royce, family friend, tells her the boys have eaten, she snaps at him for not being part of the family, then takes a bottle of wine into Rosie's room and smokes marijuana. Mitch and Terry's parents arrive and suggest to Mitch to depend on Terry more. Mitch says that Terry has her own life, at which her mother scoffs. One day, Terry calls Stan to tell him that she would be running late and cannot take the boys to school. He mentions this to Mitch, who offers.
Mitch loads the boys into the car in the garage, starts the car without opening the garage door, and realizes that she has left her cell phone upstairs. She leaves the car running in the enclosed garage. Upstairs, she spots a television report that shows released photographs of the crime scene where Rosie was found and, horrified, stops to watch it. A few minutes later, Terry enters the smoke-filled garage and shuts off the car. Later, Stan thanks her for taking care of the boys while they have grieved and she tells Stan about the incident.
During the second season finale, it's revealed that Terry was the one who killed Rosie. During a flashback, it is shown that Jamie Wright was the one who discovered Rosie had overheard the meeting between him, Michael Ames, and Nicole Jackson. Jamie beat Rosie and chased her through the woods until he caught her and locked her in the trunk of his car. He then called Richard Ames and while the two of them were arguing over what to do with her, Jamie told him that if their deal didn't go through because of this that he would not get his money and be able to leave his wife. Ames then says that it is over and he is not leaving his wife. Then, Terry quietly goes to the campaign car where Rosie locked inside and shifts it into "drive." The car rolls into the lake and slowly submerges as Rosie screams. Crying, Terry insists to the Larsens that she did not know that it was Rosie in the trunk. Terry is then arrested for Rosie's murder.