In the case of Youakim et al. v. Miller, Director, Department of Children and Family Services, et al., 1975, the U.S Supreme Court ruled in favor of a couple who were denied foster care payments by Illinois because they were related to the children they cared for. The court held that under Title IV-E of the Social Security Act (which provides federal funding for state-run foster care programs), states cannot discriminate between relative and non-relative caregivers when determining eligibility for benefits. This decision was based on an interpretation that Congress intended all licensed foster families to be treated equally regardless if they are relatives or not. Therefore, it was concluded that denying payments to relatives caring for children solely because they are related is inconsistent with federal law.

In the dissenting opinion for Youakim v. Miller, Justice William Rehnquist argued that the majority's decision was an overreach of federal power and a misinterpretation of the Social Security Act. He contended that states should have discretion in determining how to allocate their foster care resources, including making distinctions between related and unrelated foster parents. According to him, Congress did not intend to dictate specific state policies when it passed legislation providing financial assistance for child welfare services; rather, it sought only to encourage states' efforts in this area by offering them funding support. Furthermore, he believed that Illinois' policy of paying less money to relatives who take in children than non-relatives could be justified on rational grounds: namely because family members might be expected or willing to provide care without compensation due simply from familial obligation or affection.