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3.
Family members, with sexual benefits. Popular in Pennsylabama and Pennsyltucky with inbreds.
mother: Hey son, wanna blowjob.

son: Cool. Family with benefits.

father: Let me git the video camera.
by Cunty Fresh Fanatic November 20, 2010
 
1.
Family with Benefits is pretty much like incest, where two family members who have a sexual relationship and has sexual intercourse without being emotionally involved.
Micah - Did you know that Eric encountered a family with benefits with his mom? Everyone is talking about it at school!

Jai - Really? That's pretty gross
by Yoshiii June 08, 2014
 
2.
Similar to friends with benefits, a family with benefits is a group of friends that are close enough to be called a family and have a relationship characterized by random hookups between many/all of the members. The relationship is fucked up, but it works... somehow.
"Did you hear Mary slept with Paul and Rob last weekend?"

"Damn, that girl is definitely bringing this family with benefits closer together!"
by robertoblanco August 18, 2011