Household staff and family legacy: insurance, obligations and an organized estate

Household employee insurance: when the family becomes an employer

Many Florida families rely on a housekeeper, a nanny, a driver or a caregiver. At that point the family usually becomes an employer, with tax duties and risks that a homeowners policy does not always address. IRS Publication 926 explains that a worker is your employee if you can control not only what work is done but how it is done, and its examples include nannies, housekeepers, cooks, drivers, caretakers and private nurses¹. If an agency provides the worker and controls what work is done and how, the worker is not your employee¹.

• Social Security and Medicare: in 2026, if you pay a household employee $3,000 or more in cash wages, those wages are subject to these taxes¹. There are exceptions, such as your spouse, your children under 21, your parents and, generally, workers under 18 whose principal occupation is not household work.
• Federal unemployment (FUTA): applies if you pay $1,000 or more in cash wages to household employees in any calendar quarter of the current or prior year¹.
• Florida reemployment tax: the Florida Department of Revenue states that an employer of domestic workers becomes liable after paying at least $1,000 in wages in a calendar quarter of the current or prior year⁴.
• Forms: Schedule H with your federal return, Form W-2 for the employee and Form I-9 employment eligibility verification when you hire someone to work on a regular basis¹.
• Income tax withholding: not required; you withhold only if the employee asks and you agree¹.

Workers comp for a nanny or housekeeper in Florida

Florida's workers' compensation law excludes domestic servants in private homes from the definition of employment². As a result, a family generally is not required to carry this coverage for its nanny or housekeeper. The same law lets an employer waive that exclusion and accept the system voluntarily, with the protections the law gives covered employers³.

Not being required does not make the risk go away. A caregiver lifting an older adult, a housekeeper slipping on a staircase or a driver hurt in a crash can all lead to medical bills and lost wages. Many homeowners policies define a residence employee and may offer some medical payments or liability coverage, but conditions and exclusions vary widely from policy to policy. Before deciding, it helps to review:

• What each person does and how physically risky it is, such as elder care, yard work or driving.
• How your homeowners policy and your umbrella policy treat injuries to residence employees.
• Who the formal employer is: the family, a trust, an LLC or a family office. If staff are paid through a company with other employees, the analysis may be different.
• Whether staff also work at another property or in another state, where the rules can change.

Employment claims, background checks and confidentiality

A household employer can face the same kinds of claims as a business: wrongful termination, discrimination, harassment or retaliation. Many homeowners and umbrella policies exclude or limit employment-related claims. Employment practices liability insurance (EPLI) is also available for households, as an endorsement or a separate policy, although wage and hour disputes are usually excluded or tightly limited. It is worth asking whether your current program includes this coverage and at what limits.

Background checks have rules too. The FTC and the EEOC explain that if you use a consumer reporting company, you must tell the applicant in writing, in a stand-alone document, that you might use the information for employment decisions, and get the applicant's written permission. Before taking adverse action based on the report, you must provide a copy of the report and A Summary of Your Rights Under the Fair Credit Reporting Act (FCRA)⁵.

• A confidentiality agreement, drafted by an attorney, covering financial information, travel schedules, security codes, photos and social media.
• Access protocols: keys, cards and alarm codes that change when someone stops working in the home.
• An employment agreement or letter describing duties, schedule, pay and use of family property.
• Organized records of payments, time off and reviews, which help with any claim.

When staff drive the family's cars

In Florida, a vehicle owner can be held liable for damage caused by someone driving the car with permission, under the dangerous instrumentality doctrine. The state's auto minimums are also low: $10,000 in personal injury protection (PIP) and $10,000 in property damage liability, with no bodily injury liability requirement for private passenger cars. When a driver or nanny takes the children to school in a family car, that car's policy and the family umbrella are the ones that respond first.

• Tell the insurer who drives the vehicles regularly; many policies ask you to list regular drivers in the household.
• Review the candidate's motor vehicle record (MVR) with their permission, and repeat the review periodically.
• Put in writing which vehicles staff may use and for what: school runs, errands or personal use.
• If an employee uses their own car for family errands, their personal policy usually responds first, and its limits may be low.
• Confirm that your auto limits meet the minimums your family umbrella policy requires.

Imagine a hypothetical family whose driver causes a crash with several people injured while picking up the children. The question is not only whether there is insurance, but whether the auto and umbrella limits are enough, whether the driver was listed on the policy and who the driver's formal employer was.

Estate planning and insurance: the family inventory

The second half of this guide is about legacy. In estate planning, insurance is one piece among many, and often the most scattered: policies with different insurers, deeds with a closing attorney, accounts at several banks and advisors who do not always know each other. An organized family inventory reduces confusion at the moment clarity matters most.

• Policies: type, number, named insured, limits, deductibles, renewal dates and the agent's contact.
• Assets: home deeds, titles for cars and boats, collections and their appraisals.
• Accounts: institutions, account types and who has signing authority or access, without writing passwords in the document.
• Entities: trusts, LLCs and partnerships, with their formation documents and who manages them.
• Advisors: attorney, CPA, insurance agent, financial advisor and banker, with contact details.
• Household staff: agreements, pay, benefits, confidentiality agreements and who supervises them.

Trusts, LLCs and life insurance: ownership must match the policy

Many families use trusts and LLCs to own homes, cars, boats or collections. That decision is made with an attorney and a CPA; this guide does not offer legal or tax advice. What is worth knowing is that when the legal owner of an asset changes, the policy should reflect the change. If a home moves into a trust but the policy stays in the individuals' names, or an LLC owns a boat insured under a personal policy, a claim can turn into a dispute or leave gaps in liability coverage.

• When a home moves into a trust, ask whether the trust or the trustee should appear as a named or additional insured.
• When an LLC owns a vehicle, a boat or a rental property, confirm that the policy covers the entity and not only the individuals.
• Check that the family umbrella policy recognizes the entities that own the assets.
• Coordinate the owner and beneficiaries of life insurance policies with the estate plan.

Life insurance plays a liquidity role in many plans: it can provide cash for expenses, debts or taxes, or to even out inheritances when one child receives the family business and another does not. Who should own the policy, often a trust, is a decision for the attorney and the CPA. According to LIMRA, life insurance coverage among Hispanics fell from 51% in 2021 to 40% in 2025, lower than any other ethnic group⁷.

As a next step, gather your inventory and review the questions below with your own licensed agent, your estate planning attorney and your CPA, ideally in the same conversation.