Financial Realities of Adoption for LGBTQ+ and New Families

Adoption is one of the most meaningful ways to grow a family. However, it also comes with a unique set of financial considerations, especially for LGBTQ+ individuals and first-time parents. While the emotional rewards are immeasurable, the financial journey can be complex.

The process requires thoughtful financial planning, legal awareness, and a clear understanding of available resources.

Understanding adoption costs

The cost of adoption varies significantly depending on the path your family chooses.

Private domestic adoptions through an adoption agency or attorney can range from $25,000 to $60,000.¹ International adoptions come from the top three sending countries of India, Colombia, and Bulgaria. Costs for international adoptions generally range from $25,000 to $45,000. Even foster care adoptions can involve legal and administrative fees ranging from $8,000 to $40,000.²

These expenses can feel daunting, but they’re not insurmountable. Families can ease the burden by taking advantage of financial tools designed to achieve life goals. Don’t overlook the benefits of family wealth planning for a holistic and long-term plan.

One of the most valuable resources is the federal Adoption Tax Credit. The credit allows families to claim up to $17,280 per child in qualified expenses for 2025. Adoption Assistance (AAP) is a subsidy available if you adopt through the U.S. foster care.³ However, eligibility is determined by each state and the adoption subsidy may be negotiable with the state.

In addition, many employers now offer adoption benefits. These benefits might include reimbursement programs, paid parental leave, and access to legal or counseling services. They can make a significant difference, particularly for LGBTQ+ families. Additional legal steps may be necessary to secure parental rights for LGBTQ+ parents.

Preparing for legal and health care coverage

Legal planning is a critical part of the adoption process. Even when both names appear on a birth certificate, some states require a second-parent or confirmatory adoption. This process helps ensure full legal recognition.

A second-part adoption involves confirming legal rights for a non-genetic or non-birthing parent. A confirmatory adoption is for assuring the state recognizes legal parentage according to state laws.⁴ Both options generally come with additional legal costs that vary by state.

Estate planning is equally important. Create or update wills, guardianship designations, and beneficiary updates. These updates can help protect the family’s future and contribute to the care of children.

If only one parent is non-biological, proper estate planning is essential for clarifying custody wishes. This might occur with one birthing parent or a surrogate parent. For same-sex couples, married or unmarried, family members may contest a will regarding child custody.

Health care is another area where preparation pays off. Confirm that your insurance covers the adopted child from day one or “placement.” This typically means the time at which you become financially responsible.

Insurance plans through your employer are subject to federal laws but private plans have state regulations. Finding inclusive health care providers may also be a priority for LGBTQ+ parents. Such providers could have an influence on both cost and access.

Child care can also be a considerable cost, if needed. In 2023, the average cost for daycare was $343 weekly, while a nanny was $827 weekly.⁵

If you’re considering adopting a child with special needs, or they end up having disabilities, there are government benefits available. The benefits are essential but can be difficult to obtain or manage. That’s where special needs planning becomes crucial. There may be a mounting pile of medical bills related to diagnosis or care. Supplemental savings vehicles, such as ABLE accounts and special needs trusts, can help with maintaining public benefits and securing long-term financial resources.

Fortunately, financial support doesn’t end with tax credits and employer benefits. Several nonprofit organizations offer grants specifically for adoptive families, including those in the LGBTQ+ community. You might find funding opportunities on digital platforms. Community-based fundraising and crowdfunding can also help bridge remaining gaps.

Building a financial plan

Long-term and comprehensive financial planning is essential. As families grow, so do their financial responsibilities. Take steps to help ensure stability and security for years to come with proper wealth management. Set up college savings accounts, purchase life insurance, and build emergency funds.

The benefits of a financial plan begin before adopting a child. It can help you save money for legal fees or figure loan payments into your cash flow. A solid financial plan is useful for tax planning, insurance protection, estate planning, retirement savings, investment management, and more.

Ideally, commitments happen to all areas in your financial life prior to adding a child to the family. This can help ensure financial security in the long term.

Once the adoption is complete and your bundle of joy is home, it’s not too early to begin saving for their future. Setting up a 529 education savings plan can help you prepare for college expenses and for some K-12 schools’ tuitions. You might consider establishing a custodial brokerage account or Roth IRA and asking grandparents to contribute.

Getting help

Adoption is a journey of love, but it’s also a financial commitment. With the right planning and support, LGBTQ+ and new families can navigate the process with confidence — focusing less on the costs and more on the joy of welcoming a child into your lives.

If you want to know more about maintaining financial security before, during, and after adopting a child, be sure to connect with your Mercer Advisors wealth advisor.

Not a Mercer Advisors client? Our advisors provide inclusive, thoughtful guidance tailored to your life and long-term financial stability. We’d be happy to chat with you about the financial realities of adoption and how we tailor solutions for our clients. Let’s talk.

¹ “Adoptions in the US ~ Our Annual Update.” Creating a Family, Jan. 16, 2025.
² “What is the cost of adoption from foster care?” AdoptUSKids, 2025.
³ “Understanding the Adoption Subsidy When You Adopt from Foster Care.” Creating a Family, May 9, 2024.
⁴ “Securing LGBTQ+ Parentage by State: Stepparent, Second Parent, and Confirmatory Adoption.” Family Equality, October 2023.
⁵ “How Much Does Child Care Cost? 2025 Cost of Care Report.” Care.com, Jan. 29, 2025.

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