What Is a Sensible Way to Pay Family Members Who Work in the Office?

Pay a family member for the work they perform, using the same standards the office would apply to another employee. Define the role, hours, responsibilities, and reporting line first. Set compensation based on the work, the person's qualifications, and the office's ability to support the position. Family status alone does not determine pay.

Start With a Defined Role

Compensation is hard to assess when a job is vague. Write down the expected work, the level of authority, and how performance will be reviewed. Consider whether the office needs the role and whether the family member is qualified for it. For a role that covers operations and investment work, or includes family service, distinguish the responsibilities so compensation has a clear basis.

Compare pay with credible information about similar positions and the office's approved budget. The family office compensation estimator can help frame staff cost assumptions. The family office cost calculator can help the family consider compensation as part of the office's broader operating expense.

Write Down Salary and Incentives

Set base pay, benefits, bonus eligibility, and review timing in writing before the person starts. A reasonable base salary gives the employee a predictable arrangement. A bonus can recognize defined results or other contributions. The family should decide in advance what counts and who evaluates it. The terms should make clear to the employee and family how a decision will be made.

In my discussion of family office talent, I describe the need to consider retention and how compensation can align a professional with the family's objectives. The same principle applies when the employee is a relative. Avoid informal promises made during a good year or a family conversation. Compensation commitments can be difficult to change later, so take care with the original agreement.

Keep Employment Separate From Family Wealth

Family support and distributions serve different purposes from employment compensation. Record each separately and explain who has authority over them. This distinction helps the office track its costs and reduces the risk that a relative sees pay as a substitute for an ownership or family governance discussion. Record any gifts separately as well.

Use the same review process for family and non-family employees. Document the work and provide feedback. Adjust pay through the agreed process. If the family member's duties change, revisit the role and compensation together instead of relying on informal expectations. Where tax, employment, or entity details matter, talk with your attorney or CPA before finalizing the arrangement.

Review the Arrangement as the Office Changes

Reassess the position when responsibilities, time commitment, or the office's needs change. The family should be able to explain the package in business terms and show how it fits the office's plan. If the role no longer meets a need, address that directly to avoid keeping an unnecessary position to sidestep a personal conversation.

Fair compensation does not mean every family member receives the same amount. The basis should be clear, tied to the work, and applied with care. That gives the employee a professional standard to meet and gives the family a consistent way to discuss pay.

Some families like to pay lower salaries and higher bonus and carry, it just depends on your values.

Sources: Centimillionaire Strategies, The Single Family Office. Informational only, not financial, legal or tax advice.