What is an 'Immediate Family'
Immediate family members usually include a person’s parents, spouse, children and siblings. A person’s grandparents, grandchildren, in-laws and domestic partners sometimes are included in the immediate family unit, depending on which law or organization governs the determination. The definition of immediate family affects whether a person can use paid or unpaid leave to care for a sick family member or attend a funeral, and it also restricts some financial transactions, especially those involving the stock market.
BREAKING DOWN 'Immediate Family'
An example of how the designation of immediate family affects the stock market is that the Financial Industry Regulatory Authority (FINRA), formerly the NASD, prohibits the sale of hot issues to immediate family members, as stated in the Rules of Fair Practice. Additionally, rules governing a person's immediate family are noted in FINRA's concepts of withholding and free-riding.
The determination of which relatives are in an immediate family can seem murky at times because, unless a specific law is involved, it’s up to companies and organizations to make their own rules. As an example, federal law doesn’t require companies to give employees paid bereavement leave when they need to attend a funeral. Many companies choose to offer this benefit anyway, but they can heavily restrict the leave or can include extended family and even close family friends. While corporations can draft their own sick-leave policies, companies with 50 or more employees must comply with the federal Family Medical Leave Act (FMLA). The FMLA requires up to 12 weeks of unpaid, job-protected leave for employees who need to care for a sick member of their immediate family.
Which Family Members Are Covered Under FMLA?
The FMLA has a fairly strict definition of which relatives are included in your immediate family. The law defines immediate family members as spouses, parents and minor children, including adopted and foster children who are newly placed into the family. In-law parents aren’t included in the definition, even when those individuals live with the employee. While children are included in the definition of immediate family, they must be under age 18 or unable to care for themselves.
Examples of Stock Sales That Are Prohibited for Immediate Family
To prevent stock manipulation, the FINRA prohibits the sale of new-issue stock to the immediate family of the brokers who sell the stock. In addition, when a company goes public, the immediate family members of the company owners cannot purchase the initial offering. The FINRA has a broad definition of immediate family that includes all in-laws and anyone who relies on the person for material support.