Mar 29, 2017

Adoption and the Options for Managing Costs

By Jarrod Upton

Making the decision to adopt is one of the most important decisions a person can make, and there are a multitude of reasons that inspire that choice. Some parents who already have birth children wish to enlarge their families and provide a home for a child in need. Others may adopt because they believe they are too advanced in age to undergo the rigors of pregnancy and birth. It is also far more common for single people to adopt so they can realize their dream for a family. And of course, both singles and couples adopt as a result of biological infertility.

For all people who choose to adopt, the process can be a lengthy and costly one. However, there is an abundance of online resources that can help guide would-be parents through all the legal and financial challenges they will face in their quest to adopt a child.

There are several different options that people can pursue when choosing to adopt. Below are the most common types:

Public & Private Adoption Agencies

Both public and private adoption agencies are regulated and licensed by the state to place children with adoptive parents. Typically, public adoption agencies place children who are in the state’s care (including foster care), often because they've been orphaned, abandoned or abused. Private adoption agencies are usually run by charities or social service organizations, and they typically place children for adoption who have been brought to the agency by existing or expectant parents.

Independent Adoption

Another type of adoption involves a direct arrangement between birth parents and adoptive parents, often with a doctor or a member of the clergy serving as a go-between. Because of the nature of an independent adoption, adoptive parents would be wise to engage the services of an attorney to handle the required paperwork. Independent adoptions are not allowed in some states and in other states they are heavily regulated, so make sure to check your state's laws before exploring this option.

Identified Adoptions

Identified adoptions are a combination of agency and independent adoptions. Usually the adoptive parents find a mother who intends to put her child up for adoption, and then both sets of parents petition an adoption agency to facilitate the process. The advantage of an identified adoption is that there is no "wait list" for the adoptive parents. Also, prospective parents have greater control over selecting the child they choose to adopt.

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International Adoptions

International adoptions are the most complicated of all the adoption methods.

To adopt a child who is a citizen of a foreign country, adoptive parents must comply with the laws of their home state, in addition to the laws of the host country. Parents are also required to obtain an immigrant visa for the child and

if approved, the child will be granted U.S. citizenship upon entering the country.

In addition, adoptions can be motivated by other life events. Stepparent adoptions occur when a parent's new spouse adopts the parent's child from a previous partner. Relative adoptions – typically grandparents, aunts and uncles – adopt a child in the event of death or incapacitation of the birth parents. And same-sex couples are also adopting children more frequently, though the regulations surrounding those adoptions vary from state-to-state,

The Costs of Adoption

The costs to adopt a child can vary widely, depending on which type of adoption method is pursued. For private infant adoption, the range is from $5,000 – $40,000, with the average being around $28,000. However, some adoption agencies have a sliding fee scale where adoption costs are based on your income.

The cost of international adoptions is all over the map, depending on the country in which the adoption occurs. Costs for adopting abroad vary depending on the expense of airfare, how long you are required to stay in country, and how much the country charges. However, for most people, it is an expensive and lengthy process.

On the other hand, adopting a child through foster care is practically free. Few families pay more than $2000 dollars and some pay nothing at all. Also, the vast majority of families who adopt from foster care receive a monthly subsidy to help pay for the cost of raising their adopted kids.

Adoption Tax Credits and Grants

Though the costs of adoption can be expensive, there are tax credits and grants available to help defray those costs. The IRS offers a nonrefundable tax credit for qualified adoption expenses paid to adopt an eligible child. In addition, many adoption agencies provide grants or financial assistance to prospective adoptive parents, and there are also grants available from the National Adoption Foundation.

Also, many companies offer their employees a reimbursement program that helps them to pay for the costs of adopting a child. So, if you’re planning to adopt, make sure to check with your company’s HR department to find out if that benefit is available to you.

DISCLOSURE: United Capital Financial Advisers, LLC (“United Capital”) provides financial life management and makes recommendations based on the specific needs and circumstances of each client. For clients with managed accounts, United Capital has discretionary authority over investment decisions. Investing involves risk and clients should carefully consider their own investment objectives and never rely on any single chart, graph or marketing piece to make decisions. The information contained in this article is intended for information only, is not a recommendation to buy or sell any securities, and should not be considered investment advice. Please contact your financial adviser with questions about your specific needs and circumstances. The opinions expressed in this article are those of the author and not necessarily those of United Capital. Adoption is a complex process, consider seeking the advice from an attorney or other professionals experienced in this area.

United Capital Financial Advisers, LLC (“United Capital”), is an affiliate of Goldman Sachs & Co. LLC and subsidiaries of the Goldman Sachs Group, Inc., a worldwide, full-service investment banking, broker-dealer, asset management and financial services organization. Investing involves risk and clients should carefully consider their own investment objectives and never rely on any single chart, graph or marketing piece to make decisions.

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