Financial Considerations of Child Adoption

Financial Considerations of Child Adoption

According to recent statistics, one out of every 25 U.S. families with children have an adopted child. This makes the U.S. the leading nation for child adoption, with more adoptions than the rest of the world combined.1

Few actions can truly match the generosity and impact of welcoming a child into a family through the adoption process. Though it is first and foremost an act of love, there are a number of financial costs that all prospective adoptive parents need to consider. Advisors with clients considering adoption can play a valuable role in helping them chart a financial path to realizing their dreams.

Financial Costs to Consider

Financial costs associated with adoption will vary, partly depending on the type of adoption being pursued: foster care, a private agency, independent or overseas.

The following are costs for consideration:

The Initial Cost of Adoption

These costs may range from little, if any, cost (foster care adoption) to anywhere from $15,000 to $50,000 for a private agency, independent or overseas adoption. These fees may include expenses such as home study; court and legal fees; birth parent medical and legal expenses; foreign travel; medical care for children; and immigration processing. They are significant and will vary widely depending on the government, private agency or orphanage involved in the adoption.

Typical Child Rearing Costs

The cost of raising a child is estimated to be nearly $250,000 over the child’s first 18 years, not including the cost of a college education. While these expenses are incurred over a long period of time, they do, nevertheless, make a substantial claim on household income.

Atypical Costs

Parents who adopt a special needs child or a child from overseas may find that they encounter added expenses. These costs might include unique educational and childcare requirements, and physical and mental health costs—all of which are difficult to estimate.

Tap All Available Financial Resources

While the costs may be daunting, prospective parents should know that there are many programs that can provide financial assistance. Among them are:

  • Federal assistance of up to $2,000 exists to reimburse families for “reasonable and necessary adoption fees” (e.g., home study, court costs, attorney fees).
  • Federal assistance is available to cover recurring expenses up to an amount that may not exceed what a state would pay to maintain the child in foster care.
  • State assistance programs exist to help with the costs of adopting a child with special needs, including special education, therapy and rehabilitation.
  • Many employers offer adoption benefits that range from $500 to over $25,000, plus paid parental leave.2 (Government assistance is generally reduced by the amount paid by the parents’ employers.)
  • In certain cases, federal and state adoption tax credits may be available.
  • Charitable organizations exist that may be able to make grants or loans to help families meet the costs.

Advisors should be aware of such situations as they can play a valuable role with clients considering adoption in helping them chart a financial path to realizing their dreams.



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