How to Make Adoption an Affordabe Option
How to Make Adoption an Affordabe Option 2015 Nationa Endowment for Financia Education. A rights reserved. The content areas in this materia are beieved to be current as of this printing, but over time, egisative and reguatory changes, as we as new deveopments, may date this materia.
Tabe of Contents Introduction 4 How to Use this Booket 4 Adoption Terminoogy 5 Pubic Adoption Agency 5 Private Adoption Agency 5 Adoption Exchange 5 Waiting Chid, Chid with Specia Needs 5 6 Foster-to-Adopt Home 6 Open, Semi-Open, and Cosed Adoption 6 7 Sidebar: Myths About Adoption 6 Myth 1: A Adoptions Are Expensive 6 Myth 2: Adoptive Famiies Must Be Rich 6 Myth 3: Adoptive Famiies Must Own Their Own Homes 6 Myth 4: Adoptive Parents Must Be Married and Without Chidren 8 Myth 5: Adoptive Famiies Must Pay for Everything 8 Myth 6: Lega Fees Are High 8 Independent Adoption 7 Intercountry Adoption 7 Kinship or Reative Adoption 7 8 Guardianship 8 Home Study, Home Adoption Study 8 Pre-Pacement 9 Pacement 9 Post-Pacement 9 Finaization 9 Post-Adoption 9 An Overview of the Adoption Process 10 Genera Steps 11 The Home Study 11 12 Tips for Seecting an Adoption Agency or Lawyer 12 13 How Long Wi It Take? 13 Adoption Expenses 14 Adoption Fees 15 Home Study Expenses 15 Parenting or Adoption Information Casses 15 Home Study Updates 15 16 Lega and Court Costs 16 Finaizing the Adoption 16 Terminating the Bioogica Parents Rights 16 Lega Chaenges to Adoption 17 Misceaneous Expenses 17 Transfer Costs 17 Expenses Reated to Specific Adoption Types 18 Waiting Chid Adoption 19 Expenses Reated to Finding a Chid 19 Pre-Pacement Visit Expenses 19 Counseing Expenses 19 Medica Expenses 19 Independent Adoption 20 Expenses Reated to Finding a Chid 20 Lega Expenses 20 Birth Expenses 20 Adoption Insurance Expenses 21
Intercountry Adoption 21 Lega, Agency, and Chid Care Expenses 21 Paperwork Expenses 21 Trave Expenses 22 Potentia Risks 22 Kinship/Reative Adoption 22 Post-Adoption Expenses 23 Preparing for a Chid 24 Persona Records and Heath Care 24 Sidebar: Typica Chid-Raising Expenses 24 Birth Certificate 25 Socia Security Number 25 Heath Care Immunization and Heath History 25 Heath Care Coverage 25 Services 25 Tutoring 25 Specia Education 26 Counseing 26 Financia Resources for Adoption Expenses 27 Adoption Tax Credits 28 Quaified Adoption Expenses 28 Nonquaified Adoption Expenses 28 Caiming the Adoption Tax Credit 28 29 Income Tax Dependency Exemption 29 Assistance/Subsidies and Taxabe Income 29 Financia Resources for Waiting Chid Adoptions 30 Assistance with Nonrecurring Adoption Expenses 30 Tite IV-E Adoption Assistance Programs 31 Assistance with Medica Expenses 31 Assistance from Socia Services 31 Miitary Subsidies 31-32 Caiming the Adoption Reimbursement 32 Miitary Assistance for Adoption 32 Empoyee Benefits Programs 32-33 Federa Famiy and Medica Leave Act 33 Siding-Scae Fees 34 Loans 34 Possibe Loan Sources 34 Loan Sources to Avoid 34 How to Make Adoption an Affordabe Option Support for Adoptive Famiies 35 Support Groups 35 Parenting or Adoption Casses 35 Panning for a Chid s Future 36 Wis and Trusts 36 Beneficiary Designation 37 Trusts for Chidren with Disabiities 37 Birth Parent Search 37 Concusion 38 Resources 39 Adoption Checkist 39 Adoption Information 39 Acknowedgments 40
INTRODUCTION Many prospective adoptive parents are highy motivated to adopt a chid, but are concerned that the process may be too compex and expensive. Other parents, who are in the midst of the adoption process, are surprised by the various expenses. The Nationa Endowment for Financia Education (NEFE ), the Adoption Exchange, and the Dave Thomas Foundation for Adoption are providing this booket, How to Make Adoption an Affordabe Option, to hep parents prepare for a the financia costs of adopting and raising a chid. This booket covers expenses common to most adoptions, expenses unique to the various types of adoption, financia assistance for adoption and post-adoption expenses, and tax breaks avaiabe to adoptive parents. Prospective adoptive famiies need not be deterred by myths about the expense of adoption, but they aso shoud not aow emotions to bind them to the rea costs. With carefu financia panning, adoption can be an affordabe option. 4 How to Use this Booket How to Make Adoption an Affordabe Option is fexibe enough for both prospective adoptive parents who are new to the process and those who aready have done their research but need specific information about finances. Parents can read this booket from start to finish or use the tabe of contents to find the specific information they need. Web references: This book frequenty refers to reiabe resources on the Internet. To find the information referenced in this booket, visit the cited website and enter the pubication s name in the search fied. Chid Wefare Information Gateway: The U.S. Department of Heath and Human Services Administration of Chidren and Famiies department provides a great dea of reiabe information on its Chid Wefare Information Gateway website, www.chidwefare.gov. As with other references, enter the pubication or page name in the search fied.
Adoptive parents and adoptive famiies: The terms adoptive parents and adoptive famiies are used to describe any parties interested in adoption, from singe parents to married coupes to famiies and everything in between. For more information on a aspects of adoption, visit the Dave Thomas Foundation for Adoption website at www.davethomasfoundation.org and downoad a copy of the free Step-by- Step Guide to Adoption. Aso visit the The Adoption Exchange website at www.adoptex.org. Adoption Terminoogy To understand the adoption process and a of its direct and reated expenses, it heps to understand adoption terminoogy. Pubic Adoption Agency A pubic adoption agency is a state or county agency responsibe for pacing waiting chidren in foster care with adoptive parents. The agencies often have names such as department of socia services, department of human services, or department of chidren and famiy services. Private Adoption Agency A private adoption agency is a nonprofit or for-profit agency icensed by the state. Private agencies tend to speciaize in areas such as infant adoptions, domestic adoptions, or adoptions of chidren born outside the United States. Some work with pubic agencies to pace chidren who are in foster care, and they receive government contracts to do so. Other private adoption agencies rey on fees and donations rather than government funding. Adoption Exchange An adoption exchange provides connections between prospective adoptive parents and adoption agencies that pace chidren. Many states have a nonprofit, state-operated exchange that maintains a ist of adoptabe chidren waiting in the foster care system, aong with a ist of adoptive parents who have competed an adoption home study with a state agency. Many states and agencies have websites showing photos of the chidren waiting to be adopted. Regiona, nationa, and intercountry exchanges are nonprofit organizations that serve waiting chidren and adoptive parents in more than one state. These agencies often showcase photos of waiting chidren in print and onine, and they provide basic adoption information and reated services. Some exchanges aso ist potentia adoptive parents who have competed home studies and are waiting to adopt. Waiting Chid, Chid with Specia Needs Some states use the terms waiting chid and chid with specia needs interchangeaby in reation to a chid s eigibiity for federa financia assistance. In genera, however, the terms are defined as foows: Waiting chid: A chid who is in foster care and waiting for adoption is referred to as a waiting chid. These chidren come into the foster care system because of their parents actions; they may have been abused, negected, or abandoned. The majority of waiting chidren are schoo age, and some are brothers and sisters who need to be adopted together. Most chidren adopted through state or county adoption agencies are considered waiting chidren. How to Make Adoption an Affordabe Option 5
Myths About Adoption When peope express interest in adoption, they may encounter a variety of reactions, such as Are you sure you can afford that? or But you have to be married to adopt! Many reactions to the idea of adoption are based on myths. Myth 1: A Adoptions Are Expensive Adoption costs vary widey, depending on the type of adoption. According to the Chid Wefare Information Gateway, the range of adoption costs incudes: Waiting chid: no cost to $2,500 Private adoption agency: $5,000 to $40,000 Independent adoption: $8,000 to $40,000 Intercountry adoption: $15,000 to $30,000 Many pubic agencies provide adoption subsidies for chidren who are waiting for a famiy, and some private agencies may adjust fees based on famiy income or other criteria. For more information about costs and ways to defray them, see the Costs of Adopting fact sheet at www.chidwefare.gov. Myth 2: Adoptive Famiies Must Be Rich Many peope with average incomes and modest homes adopt chidren every year. Adoption professionas who make decisions about pacing chidren consider emotiona maturity and financia stabiity more than actua income. Myth 3: Adoptive Famiies Must Own Their Own Homes Renters and homeowners can adopt as ong as the home has adequate space for the chid. Chid with specia needs: The Interna Revenue Service defines a chid with specia needs as a minor who shoud not be returned to his or her parents home and whose adoption is unikey uness assistance is provided. See the Specia Needs Adoption: What Does It Mean fact sheet at www.chidwefare.gov for more information about definitions of specia needs and cost specifications. Foster-to-Adopt Home A foster-to-adopt home is approved for both foster care and adoption. Sometimes chidren who are removed from their homes because of abuse or negect are paced with adoption-minded individuas, coupes, and famiies in foster-to-adopt homes. The chidren are not egay avaiabe for adoption at the time of pacement, so there is a chance the chid wi be reunited with his or her famiy. Depending on the reason the chid was removed from the home, the chid may return home in a process known as reunification. Reunification requires the parent(s) to resove the issues invoved in the remova and prove that they can adequatey care for the chid and ensure his or her safety. If the issues remain unresoved and the parents rights are egay terminated, the chid becomes avaiabe for adoption. With foster-to-adopt homes, the transition to a new permanent home can be made more seamessy. Open, Semi-Open, and Cosed Adoption Open adoption, semi-open adoption, and cosed adoption are generay defined as foows. Note that individua agencies may have different interpretations of these terms. 6
Open adoption: An open adoption is one in which ast names, addresses, and teephone numbers typicay are exchanged. In addition, the birth parent(s), the adoptive famiy, and in some cases the chid may visit on a reguar basis. In a fuy open adoption, the birth parent(s) and the adoptive famiy know each other and have ongoing communications about the chid. Semi-open adoption: In a semi-open adoption, the focus is on privacy. As a resut, communication is more imited. Last names, addresses, and teephone numbers usuay are not exchanged; information sharing is ess frequent; and a communication takes pace through a third party, usuay the adoption agency. Cosed adoption: In a cosed adoption, the focus is on confidentiaity. No identifying information about the birth famiy or the adoptive famiy is shared and the famiies do not communicate with each other. The adoptive famiy usuay receives nonidentifying information about the chid and the birth famiy before pacement. After adoption, the records are seaed permanenty. Typicay the records remain seaed uness a court order is obtained or, in some states, unti the adopted chid reaches aduthood. Most adoptions of waiting chidren are cosed adoptions. Foster parents are encouraged to work with birth parents so there may be a reationship between the birth famiy and foster/adoptive famiy that continues even after the adoption. See the Considering Openness in Adoption section at www.chidwefare.gov for more information. Independent Adoption An independent adoption is arranged through a third party, such as a awyer or doctor. The third party may find a birth mother who pans to pace her chid for adoption or hep the birth mother ocate a famiy interested in adopting her chid. Note that independent adoptions are ega in most, but not a, states. To find out if your state aows independent adoptions, visit www.chidwefare.gov and see the Chid Wefare Information Gateway s state statute onine booket, Who May Adopt, Be Adopted, or Pace a Chid for Adoption. Or, search the state statutes database to see how your state addresses nonagency pacement in statute. Intercountry Adoption An intercountry adoption invoves a chid born in (or a naturaized citizen of) a country other than the United States. See the Adopting Chidren from Another Country section at www.chidwefare.gov for more information. Kinship or Reative Adoption A kinship or reative adoption is one in which the chid is adopted by someone reated by famiy ties or prior reationship. The kin or reative may be a bood reative, in-aw, stepparent, or other person with a cose reationship to the chid. (The definition of reative varies by state aw.) About 30 percent of chidren adopted from foster care are adopted by reatives according to the Adoption and Foster Care Anaysis and Reporting System (AFCARS), athough some reatives choose to be the chid s guardian to preserve the chid's ega ties to one or both parents. There are many benefits to being adopted by reatives, such as increased stabiity and safety for the chid as we as the abiity to maintain famiy connections and cutura traditions. How to Make Adoption an Affordabe Option 7
Myth 4: Adoptive Parents Must Be Married and Without Chidren Singe peope, coupes without chidren, and famiies who aready have chidren by birth or adoption can adopt. In some states, singe esbians and gay men can adopt, and a few states aow same-sex coupes to adopt. However, many private agencies and foreign countries have specific requirements for the marita status, sexua orientation, age, weight, income, number of chidren, and reigion of peope who adopt their chidren. See Who May Adopt, Be Adopted, or Pace a Chid for Adoption? at www.chidwefare.gov for more information. Myth 5: Adoptive Famiies Must Pay for Everything A variety of financia resources may be avaiabe to hep famiies cover some of the costs of adoption, incuding siding-scae fees from agencies, federa and state subsidies for the adoption and ongoing care of waiting chidren, federa tax credits, and empoyer benefits that hep with quaified expenses. Myth 6: Lega Fees Are High Usuay, ega fees are a sma portion of the adoption costs, with the exception of independent adoptions handed by a awyer. The ega fees may be incuded in an agency s fees or they may be an additiona cost to the adopting famiy. Usuay, there are no ega fees for famiies adopting chidren from foster care as these fees typicay are covered by nonrecurring adoption subsidies. See the Kinship Care and Kinship Adoption section at www.chidwefare.gov for information on kinship adoption from foster care as we as information on adopting a reative through intercountry adoption. For stepparent adoption, states often streamine the adoption process. For more information, see Stepparent Adoption at www.chidwefare.gov. Guardianship A reative may become a ega guardian for a chid rather than competing an adoption. Unike adoption, guardianship does not sever the parents rights and the caregiver does not become the ega parent. The parents can petition the court to end the guardianship at any time. Guardians generay are abe to access services on behaf of the chid. Some states offer guardians monthy subsidies to hep with the expense of caring for the chid unti age 18 or 21. For detais, see Subsidized Guardianship at www.chidwefare.gov. Home Study, Home Adoption Study A home study, sometimes caed a home adoption study, prepares and evauates the prospective adoptive parents and heps match the famiy with a chid. For more information, see The Adoption Home Study Process fact sheet at www.chidwefare.gov. 8
Pre-Pacement The pre-pacement period is the time between the competion of the home study and when the chid comes to ive with the adoptive famiy. Pacement Pacement occurs when a chid moves in with the famiy who pans to adopt him or her. Post-Pacement Post-pacement is the time after the chid has been paced in the adoptive home and before finaization. The socia worker conducting post-pacement supervision wi visit the home severa times during the six to 12 months between pacement and finaization. During this time, the socia worker wi provide support for the adoptive parents and chid and hep obtain any necessary professiona assistance. A certain number of visits are required by the courts before the adoption can be finaized. How to Make Adoption an Affordabe Option Finaization Finaization is when the court takes the necessary action to make the chid a ega member of the adoptive famiy. Usuay, the whoe famiy goes to court with an adoption worker or awyer. Post-Adoption Post-adoption is not a specific period of time instead, it is the active, rewarding, and chaenging process of iving as a famiy after the adoption has been egay finaized. 9
AN OVERVIEW OF THE ADOPTION PROCESS The adoption process varies significanty depending on the type of adoption. In most cases prospective parents wi request hep from a pubic or private adoption agency, a awyer, or another intermediary. Many different expenses, federa aws, state aws, and county reguations may be invoved, creating a possiby confusing and compex experience. An overview of the process, which is provided here, can hep prospective adoptive parents with decision making. For more detais, downoad the Step-by-Step Guide to Adoption avaiabe on the Dave Thomas Foundation for Adoption website at www.davethomas foundation.org. Aso see the State Laws on Adoption section at www.chidwefare.gov. 10
Genera Steps The actua steps invoved in an adoption may vary depending on the type of adoption. In genera, adoptive parents take most of the foowing steps: 1. Learn about adoption by researching on the Internet, taking to adoptive parents, reading pubications, and contacting an adoptive parent group that wecomes prospective adoptive individuas and coupes. TIP For intercountry adoptions, pro spective parents are encouraged to research medica and psychoogica issues that are common in internationa adoptees. 2. Attend adoption information casses. 3. Consider their own feeings about adoption and the preferred type of adoption to pursue for exampe, waiting chid, foster-to-adopt, intercountry, agency, or independent adoption. 4. Consider preferences regarding an open, semi-open, or cosed adoption. TIP In genera, waiting chidren adoptions (chidren adopted from foster care) are considered cosed adoptions. 5. Interview severa agencies or awyers experienced in the preferred type of adoption. Attend orientation meetings and then seect an agency or awyer. 6. Have a home study competed. (See the next section, The Home Study.) 7. Start the process of finding a chid for the famiy based on recommendations from an agency, icensed socia worker, or awyer. TIP Whie waiting for a chid, continue earning about adoption. 8. Prepare for the chid to come home. Open adoption: For an open infant adoption, preparation may incude visits with the birth parent(s). Waiting chid: For a waiting chid adoption, pre-pacement visits with the chid wi be hed at a mutuay agreed-upon ocation and time. Intercountry: Adopting a chid from another country may require trave to the chid s country to finaize the adoption. 9. Bring the chid home. 10. Begin the adjustment period as a new famiy. 11. Finaize the adoption. 12. Continue the ifeong adoption experience. The Home Study Home studies are not standardized and may vary from state to state and agency to agency. The type of adoption ikey wi infuence who performs the home study; it is important to choose the appropriate adoption agency or icensed socia worker to perform the home study so it wi be accepted by the court. Note that the home study process may be streamined, or not required, for reative/kinship adoptions and stepparent adoptions. Check with the state or county department of socia services for guidance. How to Make Adoption an Affordabe Option 11
Expect some or a of the foowing to be part of the home study process: Interviews with the prospective adoptive appicant(s) individuay and together (if a coupe) In the course of the home study process, prospective adoptive parents wi have the opportunity to tak with the socia worker about the foowing topics: Why they want to adopt Group meetings invoving severa appicant famiies (many agencies do this) Autobiographies written by each prospective adoptive parent A home visit Medica reports from the prospective adoptive appicant(s) physicians References from friends and associates Proof of empoyment Investigations into any crimina record, incuding the state s chid abuse registry, and fingerprinting (see the Adam Wash Chid Protection and Safety Act of 2006 section at www.chidwefare.gov for detais) Participation in adoption information training casses Persona financia information Copies of tax returns Beiefs about discipine and the methods used For intercountry adoptions, famiies may need to prove to the U.S. government income and/or assets that put them at 125 percent or more above the poverty eve for the size of famiy that incudes the chid to be adopted (for the most current information on this topic, see the U.S. Citizenship and Immigration Services HHS Poverty Guideines for Affidavit of Support form at www.uscis.gov) Their readiness to parent The famiy s vaues Their hopes and expectations for the adoptive chid Their famiy s strengths and weaknesses How the famiy handes crises and change Where they wi get support or professiona hep, if needed Tips for Seecting an Adoption Agency or Lawyer Each entity in the adoption process sets its own fees for adoption services. As of this writing, there is no centra rating service that monitors and/or evauates adoption agencies and services. Foow these tips to hep ensure a smooth and affordabe process: Compare adoption fees among adoption agencies, adoption awyers, and other adoption arrangers (intermediaries). Read the How to Assess the Reputation of Licensed, Private Adoption Agencies section at www.chidwefare.gov. 12
Ask the state or county socia services department for the name of the government entity that oversees adoption to verify the reputation of the adoption agency, awyer, or intermediary. Tak to parents who have adopted and members of adoptive parent support groups to get recommendations (or warnings) about the adoption entities in the area. Carify upfront and in writing exacty what the stated adoption fee wi cover and what it wi not cover throughout the adoption process. Some agencies, awyers, and intermediaries may quote a certain fee, but ater add other charges such as postpacement fees and court costs. Ask about payment schedues. Do not pay 100 percent of the adoption costs in advance. Payments shoud be made as each step of the process is competed. How Long Wi It Take? A prospective adoptive parents usuay fee they are waiting parents. Adoption can be a ong, sow process. During the beginning stages, it can seem a bit overwheming and some adoptive parents begin to wonder if the process is worth it. It is important for prospective parents to try to be patient and remember that they can have a positive effect on the ife of a chid. The time it takes to bring a chid home varies greaty depending on the type of adoption and any unforeseeabe circumstances that may arise in day-today activities. Here are some possibe timetabes: Heathy infant: Severa months up to seven years Waiting chid: Four months up to 18 months How to Make Adoption an Affordabe Option Be wary of agencies, awyers, and intermediaries that charge high fees, want a retainer paid in fu upon appication without any provisions for a refund, guarantee a chid, or want discaimers signed before meetings or searching for a chid. Intercountry: Six months up to 24 months Finaizing an adoption usuay occurs six months to one year after pacement. 13
ADOPTION EXPENSES Adoption expenses vary depending on the type of adoption preferred and the agency, awyer, or intermediary seected. Most adoptions, however, invove a combination of fees, home study expenses, ega costs, and misceaneous expenses (such as trave and paperwork). The expenses common to most adoptions are isted here; for additiona possibe expenses, see Expenses Reated to Specific Adoption Types on page 18. Keep in mind that many financia resources are avaiabe to hep with these expenses as discussed in Financia Resources for Adoption Expenses starting on page 27. 14
Adoption Fees Adoption fees encompass various costs of working with a pubic adoption agency, private adoption agency, awyer, or other intermediary. Generay, adoption fees incude the costs of a home study, pre-adoptive counseing, identifying a chid for the famiy, pacement fees, and post-pacement visits. Waiting chid: Adoptions for chidren waiting in foster care may invove ony minima costs and often are free of charge. Independent adoption: For an independent adoption, the birth mother s iving and deivery expenses may be incuded or may be separate expenses. Intercountry: For an intercountry adoption, the adoption fee may or may not incude the costs of visas, dossier preparation, document transation, and other expenses unique to adopting chidren from other countries. Fees charged by private adoption agencies and intermediaries can range from $5,000 to as high as $40,000, and possiby more. Be sure to understand which services in the adoption process are incuded and which are separate expenses. For more information, see the Costs of Adopting fact sheet at www.chidwefare.gov. Home Study Expenses The cost of the home study usuay is incuded in the adoption fees, but it can be a separate cost in some cases. The home study fee depends on the type of adoption. Many agencies assisting in adoptions of chidren in foster care may not charge a fee for the study. If these agencies do charge a fee, often it is around $300 to $500. After the adoption is finaized, the fee often is reimbursed. If adoptive parents ive overseas, are pursuing an independent adoption, or have an independent professiona (usuay a icensed socia worker in private practice) perform the home study, the fee coud range from $1,000 to $3,000 for the home study. The home study fee may incude other services, such as an appication fee and pre-pacement services. Be sure to understand what the fee covers and what it does not cover, and ask for this information in writing. Parenting or Adoption Information Casses Adoptive parents may be required to take parenting or adoption information casses as part of the home study process. A registration fee to cover the costs of materias may be charged as part of the adoption process. Even if the casses are not mandatory, they may provide hepfu information. Home Study Updates Home studies are considered current for a imited time period, often six to 18 months. Many states require home studies to be updated after a year. Depending on the type of adoption, it may take years to adopt a chid. Therefore, the home study may need to be updated mutipe times during the wait. Ask the agency that performs the home study about the costs for updating it. How to Make Adoption an Affordabe Option 15
The home study aso needs to be updated for any subsequent adoptions, particuary if severa years have passed or if the adoptive parents use a different agency, awyer, or intermediary. Lega and Court Costs The majority of adoptions invove ega and court costs for finaizing the adoption. In some cases adoptive parents may face costs for terminating the bioogica parents rights or even for contending with a ega chaenge to the adoption. Finaizing the Adoption Adoptions are finaized as foows: Domestic adoption: A domestic adoptions must be finaized in a state court. American Indian chid adoptions: When adopting an American Indian chid, the tribe needs to be notified as required by the Indian Chid Wefare Act. In some cases the adoption must be finaized in an Indian triba court because reservations and puebos are sovereign nations. In addition, specific triba aws and procedures wi need to be foowed. For detais, see the Indian Chid Wefare Act section at www.chidwefare.gov and the Resources section on the Nationa Indian Chid Wefare Association s website at www.nicwa.org. Intercountry: Most intercountry adoptions are finaized in the chid s country of origin. However, in some cases the intercountry adoption must be finaized in the United States. For an intercountry adoption, under the Chid Citizenship Act, naturaization is now automatic at the time of finaization. Even when the adoption is finaized in the birth country, many famiies choose to re-adopt the chid in the United States so they can share that important day with famiy and friends, in addition to getting a birth certificate in Engish. The intercountry adoption agency shoud be abe to specify where the finaization needs to occur during this process. For more information, see The Chid Citizenship Act of 2000 fact sheet on the U.S. Citizenship and Immigration Services website at www.uscis.gov. Terminating the Bioogica Parents Rights For a chid to be egay adopted, the bioogica parents must vountariy and egay reinquish their parenta rights, or the courts must terminate their rights invountariy. When a chid is adopted the court creates a new ega reationship between the chid and the adoptive parents. The adoptive parents are not responsibe for the court costs reated to invountary termination. See the Grounds for Invountary Termination of Parenta Rights section at www.chidwefare.gov for more information. In some intercountry and independent adoptions the adoptive parents may have to pay the ega costs of terminating the rights of the bioogica parents. It is important to be sure that the parenta rights of both bioogica parents have been reinquished or terminated before adopting a chid. Often, the adoption cases that receive media attention resut from parenta rights that were not correcty terminated during the process. 16
Lega Chaenges to Adoption Lega chaenges to adoption are rare. If an adoptive pacement is chaenged, however, the ega expenses for the adoptive famiy can be extremey high. Adoptive parents can take financia steps, such as estabishing an emergency fund, to reduce the financia impact of a ega chaenge to the adoption. Adoptive parents shoud carefuy proceed through the steps of the adoption process to reduce the ikeihood of a ega chaenge in the first pace. The safest way to avoid expensive court battes is to be certain, in advance, that the adopted chid is egay free to be adopted meaning that the parenta rights of both bioogica parents have been reinquished or terminated in or by the courts. Misceaneous Expenses Throughout the adoption process various out-of-pocket expenses may arise. Athough these costs usuay are minor, it s best to be prepared for them. For exampe, consider the costs reated to the foowing possibe activities: Traveing to and from the office of the adoption agency, awyer, or intermediary Competing and photocopying records and other paperwork Taking time off work for interviews and home studies Arranging for chid care for any chidren in the househod Preparing for internationa trave, such as getting immunizations and passports Paying for trave, accommodations, and meas for possibe ong stays in other countries for intercountry adoption Transfer Costs Sometimes, adoptive parents must move as a resut of a job transfer or miitary reassignment before competing the adoption process. In the best situations the adoptions can be competed if the initia adoption agency is wiing to coaborate with the adoption agency in the new ocation. Otherwise, adoptive parents may need to start the adoption process over. In either case new adoption expenses may be incurred. Adoption fees aready paid to the origina adoption agency often wi not be refundabe because that work aready has been competed. If a move appears ikey during the adoption process, carify this in advance with the agency or adoption faciitator. How to Make Adoption an Affordabe Option 17
EXPENSES RELATED TO SPECIFIC ADOPTION TYPES Many adoption expenses, such as court costs, are common to neary a adoptions. (Those expenses were discussed in the previous section, Adoption Expenses.) Waiting chid, independent, and intercountry adoptions, however, have additiona possibe expenses. Prospective adoptive parents can earn about these expenses in this section. In many cases financia resources are avaiabe to hep with these expenses as discussed in the Financia Resources for Adoption Expenses section starting on page 27. 18
Waiting Chid Adoption Waiting chidren are defined as chidren who are egay avaiabe for adoption and whose parents have had their parenta rights terminated. Athough adopting a chid waiting in foster care may invove itte or no direct expense, some other expenses are unique to this type of adoption. Expenses Reated to Finding a Chid Many chidren are waiting for good homes. To find a waiting chid an adoptive famiy might: Work with a socia worker at a pubic agency to find a chid in foster care who might fit into the famiy. Check out oca waiting chidren featured on teevision and in newspapers. Review photos and istings of waiting chidren on adoption exchange and adoption agency websites. Register with an adoption exchange for its chid-matching program. The exchange may charge a nomina amount for subscribing to its photo isting book to hep with identifying a chid. Some exchanges aso offer waiting adoptive famiies the opportunity to be featured in the photo isting book for a nomina fee. Pre-Pacement Visit Expenses Prospective adoptive parents usuay wi visit a waiting chid severa times before bringing the chid home. If the chid ives in another community, perhaps even in another state, parents probaby wi be expected to trave at east once, and often severa times, to the chid s pace of residence. See the Adopting Chidren from Other States or Jurisdictions section at www.chidwefare.gov for detais. Athough the chid s agency may hep with some of the costs for transportation, food, and odging, parents probaby wi need to cover some of these costs. Counseing Expenses Many waiting chidren have experienced severe emotiona trauma from abuse, negect, or abandonment. Most have suffered mutipe osses of important peope in their ives, such as birth parents, sibings, other reatives, and oving foster famiies. Therefore, individua and/or famiy counseing may be hepfu and even necessary. Some famiies wi need ony short-term counseing to hep them get through the initia adjustment period, or sporadic counseing as the chid goes through different deveopmenta stages (particuary adoescence). Other adopted chidren and their famiies may need ong-term counseing. Medica Expenses Chidren with physica disabiities or medica conditions may require expensive treatment or ongoing care. Chidren who have experienced abuse and negect in their birth famiies, as we as osses and disruptions in foster care, often have emotiona and earning probems that respond to short- or ong-term treatment. Athough the famiy s heath care pan ikey wi cover many of these costs, consider the co-pays and time invoved. In addition, some medica costs may not be covered. How to Make Adoption an Affordabe Option 19
Independent Adoption An independent adoption invoves a third-party intermediary, such as a awyer or doctor, who heps a birth mother and famiy find each other. This type of adoption may invove agency, ega, birth, and adoption expenses. Expenses Reated to Finding a Chid Independent adoptions often invove a search fee if the intermediary identifies a pregnant woman who is considering pacing her infant for adoption. If not, adoptive famiies may need to ocate a potentia birth mother on their own, which can invove the cost of advertising through want ads on the Internet or in newspapers. (Confirm that such advertising is ega in the state.) Sometimes adoptive famiies add a separate phone ine for responses from birth mothers. For more information, see the Use of Advertising and Faciitators in Adoptive Pacements fact sheet at www.chidwefare.gov. Lega Expenses A awyer is required for competing an independent adoption. Here are some suggestions to hep ensure reasonabe ega fees: 1. Hire a awyer who is experienced in handing adoptions. Do not seect a awyer just because he or she is a friend or because friends have used his or her services, uness they used this awyer for an adoption and were satisfied with the awyer s fees and services. Do not pay an inexperienced awyer to earn on the job. 2. Have reaistic expectations about the roe of a awyer. The awyer shoud provide competent ega services, but shoud not be reied on to perform hand-hoding through the adoption process. Other professionas and support groups can fufi this need. 3. Ask the foowing questions: What is the average cost of the adoptions you have handed? Do you charge a fat fee or bi by the hour? If a fat fee, what does that fee incude? Home study? Matching with a birth mother? A ega fees? Counseing services? Advertising? Are expenses, such as the preparation of etters and documents, photocopying, teephone cas, and postage, charged separatey? Is a retainer fee required upfront? If so, how much is it? If the birth mother changes her mind, what happens to the retainer fee? 4. Come to a meetings prepared, with papers organized and a ist of questions prepared in advance, since awyers generay charge by the hour. Birth Expenses In an independent adoption, the adoptive famiy generay is expected to pay for some or a of the prenata and birth expenses of the birth mother who is panning to pace her chid for adoption. In some cases the adoptive famiy aso may be expected to pay reasonabe iving expenses, incuding rent and cothing, for the birth mother. 20
Adoption Insurance Expenses Sometimes the birth mother or birth parents terminate the adoption process before it becomes fina. If this happens, the adoptive parents may find themseves unabe to recover their expenses. In some cases it may be possibe to buy adoption insurance to protect against financia oss. Ask an adoption expert or insurance professiona for information, or see the Adoption Insurance Expenses section at www.adoption.com. Intercountry Adoption Intercountry adoptions invove chidren who were born in (or are a nationa or citizen of) a country other than the United States. An intercountry adoption requires numerous steps that may or may not be incuded in the agency s overa adoption fees. In addition, different countries have different adoption requirements that you can research. For more information, see the Intercountry Adoptions from A Z booket and the Learn about a Country section on the U.S. Department of State s Intercountry Adoption website at www.adoption.state.gov. Lega, Agency, and Chid Care Expenses Intercountry adoptions can get more expensive because prospective parents may be deaing with mutipe awyers and agencies, aong with expenses reated to caring for the chid before and after adoption. These expenses may incude: Foreign awyer fees and court costs Mutipe agency fees, which may resut in higher costs* Re-adopting the chid in the United States (many adoption professionas advise re-adopting the chid in the state where the famiy resides) Donation fees to hep pay for the foreign country s institutionaized chidren Foster care for the chid in the foreign country during the adoption process Treatment for medica probems, such as parasites or skin disorders, diagnosed after the adoptive chid arrives at his or her new home *In most cases the adoption fee wi cover the services provided by the agency doing the home study, as we as those of the agency providing pacement services. A agencies, however, do not work with a countries, so the seected agency may coaborate with an agency that does work with the adoptive chid s country. Paperwork Expenses Intercountry adoptions may generate paperwork in addition to what is required by the home study. In most cases during the home study prospective adoptive parents wi be fingerprinted and submit proof of U.S. citizenship, a marriage certificate and/or divorce papers, evidence of financia support, and a medica exam. An intercountry adoption aso may require: Passports, visas, and immunizations Document transation services A birth certificate and Socia Security number for the adopted chid How to Make Adoption an Affordabe Option 21
Trave Expenses Trave expenses incude panning for transportation, food, and odging expenses for a members of the adoptive famiy who are traveing to the chid s country. Some countries require adoptive parents to stay ony a few days; others require that at east one of the adopting parents stay for up to eight weeks to be approved as an adoptive famiy by oca officias. Consider buying trave insurance to account for unforeseen circumstances such as natura disasters. Potentia Risks Intercountry adoptions do present financia risks. A country s eaders may decide to cose its doors to outside adoptions, or they may change the requirements for adoptive individuas or famiies. Adoptive parents who are in the midde of the adoption process coud ose money and be unabe to compete the adoption of a chid they aready have seected. In most cases the adoption agency invoved wi be aware of impending changes in a particuar country, usuay before a specific chid has been identified, and redirect prospective parents to another country. At that point they may face costs for additiona paperwork required by the new country. Kinship/Reative Adoption When both parents terminate their parenta rights, a reative can adopt a chid. (The definition of reative varies by state aw.) The adoptive reative becomes the ega parent and can make decisions on behaf of the chid. Adoption by reatives can provide a sense of continuity in a chid s ife since the famiy connection remains intact. As with other types of adoption, reative/kinship adoptions present some issues that adoptive parents need to consider: Home study: Often, the pathway to adoption is streamined for adoption by a reative. Depending on the state, the home study may be shortened or not required at a. (Note that the home study process often is streamined for stepparent adoptions as we.) Income: What is the source of income and is it sufficient to raise the chid? Lifestye: How wi the adoption affect the adoptive parents work ife and home ife? Does the adoptive parent have the time to raise a chid? Longevity: Can the adoptive parent manage to raise the chid and sti pan for a financiay stabe retirement? For more detais, see the Adoption by Famiy Type: Kinship/Reative Famiies section at www.chidwefare.gov. 22
POST-ADOPTION EXPENSES Most post-adoption expenses are the norma expenses of raising a chid. For new parents, these costs can be something of a shock. The U.S. Department of Agricuture estimates that it costs the average, midde-income famiy $234,900 to raise a chid from birth through the age of 17, not incuding the cost of higher education (see the Expenditures on Chidren by Famiies, 2011 report at www.cnpp.usda.gov). There are some expenses, however, that are specific to raising adopted chidren. Assistance may be avaiabe for hep with these expenses. 23
Typica Chid-Raising Expenses To review the current costs of raising a chid (whether bioogica or adopted), use the Center for Nutrition Poicy and Promotion s Cost of Raising a Chid Cacuator on the U.S. Department of Agricuture website, www.cnpp.usda.gov. Typica chid-raising expenses generay incude the foowing: Food and cothing Furniture Chid proofing the home Heath care coverage and co-pays Medica expenses not covered by insurance Chid care Books, games, and toys Computer, software, and computer games Cephone and service Activities such as cubs, sports, camps, and music essons Bicyces and other sports equipment Transportation Vacations Reigious ceremonies Aowances Driving essons Car and car insurance Counseing and tutoring Coege, technica schoo, or vocationa schoo Preparing for a Chid When a new chid comes home, he or she is ikey to need furniture, bedding, towes, and cothing (particuary if the chid is from a different cimate). In addition, adoptive parents may want to give the chid specia wecome toys or gifts. Consider the foowing preparations for specific cases: Infant: When adopting an infant, first-time adoptive parents usuay are excited about decorating the nursery. Oder chid: An oder chid joining a famiy may want to be invoved in decorating his or her room. Adoptive parents probaby wi want to do some preiminary window shopping to narrow down the choices to fit their budget. Chid with physica disabiities: When adopting a chid with physica disabiities, make any necessary modifications to the home (such as adding a wheechair ramp). Sibings: When adopting sibings, consider whether it s necessary to add a bedroom or bathroom to the house, move to a arger home or apartment, or buy a arger vehice. Persona Records and Heath Care Many new stages of ife require paperwork, and competing a new adoption is no exception. The adoptive chid wi need a birth certificate, Socia Security number, heath history, and heath care coverage as soon as possibe. 24
Birth Certificate Once the adoption is finaized, adoptive parents shoud obtain a new birth certificate for the chid. The birth certificate is ikey to cost ess than $50. Socia Security Number The adoptive chid wi need a Socia Security number so parents can caim a dependency exemption on their federa income tax return. Adoptive parents can obtain the chid s new Socia Security number before the adoption is compete. They may want to wait, however, and appy for a Socia Security number using the chid s new name. Immunization and Heath History Adoption agencies provide the adoptive chid s medica history and immunization information. For an independent adoption this information may or may not be avaiabe, but it shoud be requested with the chid s records. Heath Care Coverage Adoptive parents shoud add the new chid to their heath care pan as soon as he or she moves into the home. They do not have to wait unti the adoption is egay finaized to add the chid to the famiy s heath care pan. In fact, heath care coverage must be provided from pacement, which is defined as the time an adoptive parent assumes fu or partia financia responsibiity for the chid. Athough adding a famiy member to a heath care pan may increase the monthy premium, it s important for adoptive parents to remember that they are responsibe for the chid s heath care as soon as the chid joins the famiy. It s critica that the chid be incuded in the famiy s heath care coverage before the adoption is finaized. 25 Note that under federa aw empoyerprovided heath pans must treat an adopted chid as a birth chid. The chid shoud be added to the famiy s pan within 30 days of adoption or pacement for adoption. The adopted chid may not be excuded from coverage because of pre-existing conditions as ong as the chid is added to the pan within 30 days of becoming eigibe. For detais, see the Protections for Newborns, Adopted Chidren, and New Parents section on the Department of Labor s website at www.do.gov. Aso read more about heath pan coverage of adopted chidren at the Department of Heath and Human Services website, www.hhs.gov, and search for the Affordabe Care Act. Most states have simiar egisation that incudes both individua and empoyer-provided heath care coverage. Each state s department of insurance shoud be abe to carify state aws. Services Adoptive chidren may require specia services such as tutoring, specia education, and counseing. Waiting chidren in particuar may need this type of support, but other adoptive chidren may need specia services as we. Consider the possibiity of facing these expenses whie panning for adoption. Tutoring Chidren iving in a foster care setting often are as much as two grades behind their peers because of frequent moves before or whie in foster care. In addition they may have experienced a genera ack of attention to their education. Tutoring may be required so these chidren can catch up with their peers. How to Make Adoption an Affordabe Option
Specia Education As with a chidren, adoptive chidren may have earning disabiities or chaenges that ca for specia education casses, physica therapy, speech therapy, or occupationa therapy. In most cases schoos are required to provide any additiona services the chid may need as part of his or her education. However, a chid may need more than the schoo can offer. If the parents heath care pan or adoption subsidy does not cover some of the costs, the responsibiity for payment of these extra services may be theirs aone. Counseing Waiting chidren may be moved frequenty among foster homes or institutiona settings, and they may have suffered emotiona, physica, or sexua abuse. Because of these experiences, they may have a difficut time adjusting to a new home and new parents. The chidren and famiies may need counseing at different times throughout the chidhood years to hep them dea with the effects of traumatic experiences before the adoption. Impact of Institutionaization section at www.chidwefare.gov for more information. Adoptive parents and any chidren they aready have aso may face significant adjustment chaenges. Thus, counseing coud be an appropriate choice for a concerned. In some instances, there may be a need for crisis intervention or, infrequenty, a chid may need to be paced in a residentia treatment center for intensive therapy. Athough heath insurance, medica subsidies, and government agencies may underwrite some of these costs, counseing can be a high out-of-pocket expense for adoptive parents. See the Parenting After Adoption and Finding Services for an Adopted Chid pages at www.chidwefare.gov. Intercountry adoptees aso may face tremendous cutura, anguage, and emotiona chaenges. Chidren who have spent their eary years in orphanages may have specia emotiona probems. Even heathy infants have adjustment difficuties or other adoption-reated issues that may, at some time, require counseing as a post-adoption process. See the 26
FINANCIAL RESOURCES FOR ADOPTION EXPENSES The federa government, state governments, the miitary, empoyers, and adoption agencies may offer various forms of financia assistance for adoptive parents ranging from ower taxes to outright reimbursement of expenses. Note that financia assistance is avaiabe for a types of adoption with a few exceptions reated to intercountry adoptions. Generay, a higher eve of assistance is avaiabe for waiting chid adoptions. 27
Adoption Tax Credits Adoptive parents may be abe to caim a tax credit on their federa income tax return for quaified adoption expenses. The adoption tax credit changes each year. Visit www.irs.gov and search for Adoption Credit. Some states offer a simiar tax credit, so adoptive parents shoud do research before fiing state taxes each year. Quaified Adoption Expenses As of this writing, the adoption tax credit appies to famiies that have federa income tax iabiity. However, the credit is not refundabe, meaning that an adoptive parent may be abe to caim the credit for quaified expenses even if no taxes are owed. Quaified expenses incude the foowing: Adoption fees Lawyer fees and court costs Trave expenses, incuding meas and odging, whie away from home Re-adoption expenses reated to adopting a chid in another country Nonquaified Adoption Expenses The foowing are not aowed as quaified expenses for the adoption tax credit: Funds received under any state, oca, or federa program Costs that vioate state or federa aw Expenses reated to carrying out a surrogate parenting arrangement Costs of adopting a spouse s chid Funds paid for or reimbursed by an empoyer or any other person or organization 28 Expenses aowed as a credit or deduction under any other provision of federa income tax aw Caiming the Adoption Tax Credit Individuas who adopt may be eigibe for tax credits or income excusions. The amounts may change annuay, and the rues have changed dramaticay in recent years. A adoptive parents shoud visit www.irs.gov for detais. Consut a tax professiona before fiing your returns. To caim the refundabe adoption tax credit, use IRS Form 8839. Consut the instructions for detais to incude one or more adoption-reated documents (see Form 8839 instructions for acceptabe documentation) to support the caim. Keep the foowing in mind: Adoptions that are not yet fina: The adoption tax credit can be caimed for domestic adoptions that are not yet fina. Intercountry adoptions: Intercountry adoptions must be finaized before a parent can caim the adoption tax credit. Interrupted/stopped adoptions: Adoptive parents can caim expenses for an adoption that is stopped, but the amount is appied to the maximum amount that may be caimed on a second adoption. Waiting chid adoptions: When adopting a domestic waiting chid (referred to as a specia needs chid in IRS pubications), individuas may be eigibe for a certain amount of credit or income excusion even if no out-of-pocket expenses were paid or incurred. Note: a chid who receives an adoption subsidy (typicay from some type of caretaking agency) is considered a chid with specia needs by definition.
High-income famiy adoptions: The adoption tax credit begins to phase out for taxpayers with modified adjusted gross income in excess of $194,580; it is competey phased out for those whose modified adjusted gross income exceeds $234,580 (as of 2013). For compete detais, see the Topic 607: Adoption Credit and Adoption Assistance Programs section, the Form 8839: Quaified Adoption Expenses document, and Instructions for Form 8839 document at www.irs.gov. Income Tax Dependency Exemption An income tax exemption reduces taxabe income, and therefore possiby reduces the amount of taxes an individua or famiy pays. The dependency exemption appies to adoptive chidren as we as bioogica chidren. The amount of the dependent exemption is adjusted annuay to refect the cost of iving. For 2014, the persona exemption is $3,950. The dependency exemption appies differenty to domestic and intercountry adoptions. For domestic adoptions, parents may take the dependency exemption for chidren paced with them for adoption but not yet finaized. You generay cannot caim a person as a dependent uness that person is a U.S. citizen, U.S. resident aien, U.S. nationa, or a resident of Canada or Mexico. However, there is an exception for certain adopted chidren, as expained next. Exception for adopted chid. If you are a U.S. citizen or U.S. nationa who has egay adopted a chid who is not a U.S. citizen, U.S. resident aien, or U.S. nationa, this test is met if the chid ived with you as a member of your househod a year. This exception aso appies if the chid was awfuy paced with you for ega adoption. For an intercountry adoption, the chid must have ived with the adoptive famiy for the entire tax year. Even if the adoption is not finaized, the exemption is vaid if the chid was awfuy paced with the adoptive famiy for ega adoption. Adoptive famiies must provide more than haf of their adoptive chid(ren) s support to ist them as exemptions. Some adopted chidren receive subsidies, which may provide more than haf of their support. For exampe, if a chid receives $5,000 a year in subsidies, the adoptive famiy must provide $5,001 or more a year in support to caim the chid as a dependent. For compete detais, see the Exemptions for Dependents section in Pubication 501 at www.irs.gov. Assistance/Subsidies and Taxabe Income Note that adoption assistance funds provided by the federa or state government, an empoyer, or the miitary are not considered taxabe income. In addition, adoption subsidies for the ongoing care of a chid are not considered taxabe income. How to Make Adoption an Affordabe Option 29
Financia Resources for Waiting Chid Adoptions Federa and state governments offer financia assistance with the costs of adopting and caring for waiting chidren. Quaified one-time expenses may be reimbursed. For ong-term care, adoption subsidy programs ensure that the adoptive famiies of waiting chidren have the necessary services and financia resources to meet their chid(ren) s ongoing needs. Check with the chid s agency to be sure to understand when each type of assistance is avaiabe and what is required for the pans to stay in effect. Be sure to appy for subsidy agreements in writing before the adoption becomes fina. Assistance with Nonrecurring Adoption Expenses One-time, out-of-pocket expenses for reasonabe and necessary costs directy reated to adoption may be reimbursed to adoptive famiies. These may incude adoption fees, court costs, awyer fees, required heath and psychoogica examinations, transportation, and reasonabe costs of odging and food for the chid and/or the adoptive parents, when necessary, to compete the pacement or adoption process. The federa government aows states to reimburse up to $2,000 in nonrecurring expenses, but many states have set ower amounts. The state determines the chid s eigibiity and issues the adoption assistance payments. Case workers can hep famiies by identifying which expenses are covered, how much is aowed by the state, and how to process caims for reimbursement. Adoptive famiies that are denied a government subsidy or beieve the subsidy is inadequate can appea the decision through the appropriate state agency. Note that the reimbursement of adoption expenses must be agreed upon before the adoption is finaized, and may not incude expenses reimbursed to the famiy through another source, such as an empoyee benefits program. For detais, search for nonrecurring expenses at www.chidwefare.gov. 30
Tite IV-E Adoption Assistance Programs Many chidren waiting in the foster care system are determined to have specia needs and many are eigibe for some type of adoption subsidy. In 1980, the U.S. Congress enacted the Tite IV-E program to remove financia barriers to adopting waiting chidren. Athough the assistance is federay funded, individua states determine which chidren quaify. Adoption subsidies and their amounts are decided on a caseby-case basis and the needs of the chid. The adoptive famiy s financia resources have no bearing on a chid s eigibiity for Tite IV-E adoption assistance. Subsidies are reviewed periodicay, depending on each state s poicy. According to the North American Counci on Adoptabe Chidren, severa criteria must be met to quaify for the Tite IV-E adoption assistance program: 1. The court must have ordered that the chid cannot or shoud not be returned home to the birth famiy. 2. A chid with specia needs, as determined by state definition. 3. The chid coud not be paced for adoption without a subsidy. Assistance with Medica Expenses Chidren who quaify for Tite IV-E adoption assistance are automaticay eigibe for Medicaid benefits. States aso may choose to provide Medicaid coverage for chidren who do not quaify for the federa adoption assistance program. In some cases a chid s need for medica coverage is not apparent at the time of the adoption. For chidren who have been in foster care, particuary, medica probems that were not fuy recognized or discosed by the chid wefare agency may appear ater and require ong-term and expensive treatment. In addition, the effects of mutipe foster care pacements, as we as a history of abuse and negect, may make the need for medica coverage for menta heath care equay important. Even if an adoptive famiy is certain that its heath pan wi be adequate, it is critica to arrange for the fu amount of Medicaid assistance avaiabe before finaizing the adoption. Even though a famiy may never need to use Medicaid or other benefits of the adoption subsidy programs, it is important that a possibe resources be avaiabe in case the chid or famiy eventuay does need hep. Assistance from Socia Services Under Tite XX of the Socia Security Act, adopted chidren with specia needs may be eigibe for socia services benefits if there is an adoption assistance agreement in effect for the chid. With the hep of socia workers, adoptive famiies can identify post-adoption services that wi hep the adoption succeed. Such services may incude speciaized day care, in-home support such as housekeeping and persona care for the chid, How to Make Adoption an Affordabe Option 31
and counseing. In some cases individua counseing for the chid may be covered whie famiy counseing is not, and partia costs for some services may have to be met by the adoptive famiy. It is important to know that Tite XX funds are imited and may not aways be avaiabe in each state at a given time. Miitary Subsidies The miitary wi reimburse active-duty personne for quaifying costs up to $2,000 per chid for domestic or intercountry adoptions performed through a state or nonprofit adoption agency. (Independent adoptions and adoptions performed through for-profit adoption agencies do not quaify for miitary reimbursements.) The miitary reimbursement is imited to $5,000 in a given year, even if both parents are in the miitary. Caiming the Adoption Reimbursement To caim the reimbursement, submit a DD Form 2675 no ater than one year after the adoption is fina. Fees that can be reimbursed incude adoption fees; pacement fees (incuding fees for birth parent counseing); ega fees and court costs; and medica expenses, incuding hospita expenses for the bioogica mother and her newborn infant. For more information, visit the Nationa Miitary Famiy Association website at www.miitaryfamiy.org. Go to Your Benefits, and then go to Adoption. Miitary Assistance for Adoption The U.S. miitary provides various resources for heping parents adopt and care for a chid. Leave: Active-duty service members are aowed up to 21 days of eave in addition to reguar eave to be used in connection with an adoption. As with any eave, this is granted at the discretion of the commander. Miitary famiies are not eigibe for eave under the Famiy and Medica Leave Act (FMLA). Heath care: The miitary provides heath care for adopted chidren through TRICARE heath care, which covers U.S. miitary famiies wordwide. Chidren with Disabiities: The miitary s Exceptiona Famiy Member Program (EFMP) heps ensure a disabed chid s needs are considered during the miitary personne assignment process. For detais, visit the Department of Defense s Miitary OneSource website at www.miitaryonesource.mi and search for EFMP/Specia Needs. Empoyee Benefits Programs The number of empoyers who offer adoption benefits has risen graduay each year. In Aon Hewitt s annua survey of 1,000 major U.S. empoyers, ony 12 percent offered a financia adoption benefit in 1990. In 2013, the number rose to 52percent. Empoyers that offer adoption benefits cite various advantages 32
for their companies, incuding worker productivity, empoyee retention, a positive pubic image, and equity in benefits for a empoyees, according to empoyer surveys by the Dave Thomas Foundation for Adoption. For information about adoption benefits avaiabe to empoyees of the federa government, see the Guide to Adoption and Foster Care Programs for Federa Empoyees booket on the U.S. Office of Personne Management website at www.opm.gov. For state government empoyees and private corporations, check with the empoyer to find out which types of adoptions and which expenses quaify for adoption benefits. In addition to reimbursing some adoption expenses, an empoyer may provide benefits such as: Paid eave, in addition to or incuding vacation time, sick eave, or persona days Unpaid eave (persona, hardship, medica, or chid care) that may range from three to 12 months Medica expenses for the birth mother Adoption seminars and information casses Empoyee adoption networks Counseing and support before and after pacement Even if an empoyer currenty does not offer adoption benefits, ask about benefit avaiabiity. Adoptive parents may be abe to persuade the company to begin offering them. Work with other empoyees interested in adoption, gather information for the empoyer, and present the case. The Dave Thomas Foundation for Adoption website at www.davethomasfoundation.org offers a great dea of information about adoption-friendy empoyers and adoption benefits for both empoyers and empoyees. Go to Free Adoption Resources and then Adoption Benefits. Federa Famiy and Medica Leave Act Unpaid eave under the federa Famiy and Medica Leave Act (FMLA) aows individuas to take up to 12 weeks off (unpaid but with benefits) without jeopardizing empoyment. The eave is avaiabe for anyone who works for a company with 50 or more empoyees. Athough the eave is unpaid, FMLA can provide vauabe time for a newy adoptive famiy. Adoptive famiies panning to use FMLA may want to have a financia pan in order to fund this time off. Some states require empoyers to offer their workers a minimum amount of parenta eave time. How to Make Adoption an Affordabe Option An Empoyee Assistance Program (EAP) that heps empoyees dea with persona situations or probems such as the stress and anxiety that may arise during the adoption process 33
Siding-Scae Fees Some private adoption agencies offer reduced fees based on the adoptive famiy s income. In the case of a waiting chid, most offer siding-scae fees and some require no fees. Some adoption agencies may reduce fees for ow-income famiies adopting oder chidren or chidren with specia needs from another country. When considering an adoption agency, ask if the agency offers siding-scae fees. Loans Some adoptive famiies may require a oan to cover adoption expenses. In some cases the famiy can pay back the oan quicky with subsidies or reimbursements. In other cases the famiy may have troube repaying the oan, putting the famiy s financia future at risk. Therefore, it is important to seriousy consider the risks of taking out a oan to pay for adoption expenses. It is important for the heads of the househod to maintain financia stabiity for the good of a famiy members. Visit www.smartaboutmoney.org, then search for borrowing options. Possibe Loan Sources Possibe sources for oans to hep with adoption expenses incude: Reatives Reigious organizations Life insurance Low-interest oans some banks offer oans or credit ines for adoptive parents Home equity oans, which often feature reasonabe interest rates Tip Famiies need to keep in mind that they can ose their house if they cannot make payments on a home equity oan. Private grant and specia oan programs Tip The Nationa Adoption Foundation offers direct grants, unsecured oans, and credit cards to seect adoptive famiies. For more information, visit www.nafadopt.org and go to Fund Your Adoption. Loan Sources to Avoid Adoptive parents may be tempted to fund an adoption with a credit card or a oan from a retirement pan. Most financia experts, however, recommend against using these sources of funding. Credit cards: Using a credit card is an easy source of funds, but the companies typicay charge high interest rates. Paying ess than the tota amount due accrues interest and increases the tota amount due usuay by a significant amount. Retirement pan oans: A retirement pan oan is a risk if it cannot be paid back in a short time period due to unforeseen circumstances such as a job change or job oss. If the oan is not repaid, it becomes taxabe income that is subject to a 10 percent eary withdrawa penaty (if the parent is younger than 59½ years od). The parent aso oses the potentia earnings the funds woud have achieved if they had stayed within the retirement account. Dipping into future retirement savings or running up credit card debt can add to financia and famiy stress in genera. It aso coud throw the famiy s ongterm goas and pans off course. 34
SUPPORT FOR ADOPTIVE FAMILIES Before receiving a chid and after a chid s pacement, adoptive famiy members need to be sure to take care of themseves. Adoption often is an emotionay charged experience with many highs and ows. Support Groups Adoption support groups can be hepfu to famiies who are waiting for a chid, and they are especiay important foowing an adoption. These groups are designed to hep adoptive parents cope with the chaenges of raising adopted chidren by sharing experiences with feow adoptive parents. Adoption agencies may hep form support groups; other support groups are formed independenty. Generay, the cost is minima. To find a support group, use the Nationa Foster Care and Adoption Directory Search too at www.chidwefare.gov/nfcad. Parenting or Adoption Casses In some cases parenting casses or adoption casses may be required as part of the adoption home study. Because adoption has a ifeong impact on the chid and famiy, many parents find it hepfu to continue to earn about adoption issues and parenting as their chidren reach different stages of deveopment. For more information, see the Training for Adoptive Parents section at www.chidwefare.gov. When raising an adopted chid, parents may want to attend workshops or seminars that focus on teing the chid about his or her adoption, deaing with common parenting probems (such as bed-wetting or fighting), or working effectivey with teachers and the schoo system to be sure the chid s needs are met. Adoption agencies frequenty sponsor these types of casses, and a sma registration fee usuay is required. 35
PLANNING FOR A CHILD S FUTURE Bringing an adoptive chid into a famiy can create ong-term financia panning needs. Adoptive parents wi need to review their wis and trusts, considering issues such as beneficiaries and specia-needs trusts. In addition, adoptive parents shoud prepare themseves for any financia impications of a possibe birth parent search. Wis and Trusts Adoptive parents need to think about severa things in reation to their wis and any trusts. First, they need to have a wi prepared if they do not have one. After a chid is paced in the home, adoptive parents shoud have a awyer add the chid to the wi and any trusts. Mentay or physicay disabed chidren can raise unique ega and financia issues. Parents need to think carefuy about who wi take care of the adopted chid if something happens to the parents. 36
Beneficiary Designation Generay, financia panners recommend that parents not name their underage chidren as direct beneficiaries to insurance poicies, retirement pans, individua retirement accounts, and other investments. This is because state aws restrict minors access to their funds. Individua circumstances, however, may ca for naming a chid as a primary or secondary beneficiary. Tak with a financia panner, awyer, or other speciaist to determine the most appropriate actions. Trusts for Chidren with Disabiities Famiies who adopt a chid who might never be sef-sufficient due to a physica or emotiona disabiity can arrange for a specia-needs trust. To fund the trust, famiies have severa options, which may incude one or more of the foowing resources: ife insurance proceeds, famiy savings, a payout from a awsuit, gifts from famiy or friends, or assets from an inheritance. A trust can be usefu in aowing famiy financia support for the chid without affecting the chid s eigibiity for federa Suppementa Security Income (SSI) benefits. Consut an experienced awyer and financia panner for guidance through the compexities of trusts. Birth Parent Search It is natura for an adopted chid to be curious about his or her bioogica parents or sibings. Some adoptees wi want to search for their roots or have a reunion with their bioogica parents or sibings after they reach aduthood. Adoptive parents shoud keep in mind the financia impications of searching for, communicating with, and visiting bioogica parents. Costs might incude private investigators, awyers, and trave. Performing some background work at the time of the adoption can hep. Consider the foowing: By coecting as much background information as possibe during the adoption process, parents may be abe to satisfactoriy answer some of a chid s questions unti he or she is od enough or abe to get further information independenty. Some chidren want to search for a birth parent before they are 18. Socia media makes finding information about a birth famiy easier. Some states may make the records avaiabe to the adopted chid when he or she is 18 or 21. Even then, state aws vary consideraby regarding the circumstances under which information can be reeased after the adoption. Other states keep records permanenty seaed uness a court order mandates that the records be opened for the adopted chid. For more information, visit www.chidwefare.gov, go to Adoption and then Search and Reunion. How to Make Adoption an Affordabe Option 37
CONCLUSION With carefu research and panning, aong with support from professionas, whether in a pubic or private capacity, famiies can earn to manage the financia side of adoption. A variety of federa and state government resources are avaiabe, and many empoyers offer assistance. Financia concerns need not discourage prospective adoptive individuas, coupes, and famiies from wecoming a new chid. 38
RESOURCES Adoption Checkist Read as much as possibe about adoptions. Tak to friends and acquaintances who have adopted. Attend orientation sessions at pubic and private adoption agencies. Decide what type of adoption is most appeaing, and review its features and drawbacks. Interview severa adoption agencies or simiar intermediaries. Carify and compare adoption fees. Estimate a other potentia expenses. Earmark funds and add to savings accounts for potentia expenses. Maintain adequate famiy emergency funds. Continue saving for retirement. Avoid borrowing from retirement savings. Maintain or increase ife insurance coverage. Inform empoyer and ask if the company offers adoption benefits. Appy for an adoption. Have a home study conducted. Begin the search for a chid. Seect a chid. Review and adjust expense estimates if necessary. 39 Seek and appy for financia assistance such as adoption oans, government assistance, and empoyer assistance. Prepare the home for the arriva of the chid. Add the chid to the famiy heath pan. Finaize the adoption. (In the case of intercountry adoptions, re-adopt the chid in the state of residence.) Get a Socia Security number for the chid. Get a new birth certificate for the chid. Update the adoptive parents wis, ife insurance poicies, and other appropriate documents. Join an adoptive parent support group. Identify an adoption therapist if needed. Pan for a trust if the chid has specia needs. Adoption Information Adopting.org: www.adopting.org AdoptUSKids: www.adoptuskids.org American Academy of Adoption Attorneys: www.adoptionattorneys.org Chid Wefare League of America: www.cwa.org Dave Thomas Foundation for Adoption: www.davethomasfoundation.org Internationa adoption cinics and doctors at the Chid Wefare Information Gateway: www.chidwefare.gov Nationa Miitary Famiy Association: www.miitaryfamiy.org; go to Your Benefits, then Adoption North American Counci on Adoptabe Chidren: www.nacac.org The Adoption Exchange, Inc.: www.adoptex.org NEFE Smart About Money: www.smartaboutmoney.org; search for Adoption U.S. Department of Defense, Miitary OneSource: www.miitaryonesource.mi; search for Adoption U.S. Department of Heath and Human Services, Chid Wefare Information Gateway: www.chidwefare.gov How to Make Adoption an Affordabe Option
ACKNOWLEDGMENTS How to Make Adoption an Affordabe Option was written and produced as a pubic service by the Denver-based Nationa Endowment for Financia Education (NEFE ). The Nationa Endowment for Financia Education (NEFE ) inspires empowered financia decision making for individuas and famiies through every stage of ife. NEFE is a private, nonprofit, nonpartisan, and noncommercia foundation. For more than 30 years, NEFE has been providing funding, ogistica support, and persona finance expertise to deveop a variety of research, materias, and programs. For more information about the Nationa Endowment for Financia Education, visit www.nefe.org. The Adoption Exchange envisions a word in which a chidren are vaued and grow up in safe and permanent famiies, and where famiies are supported in their critica roes. The Adoption Exchange is a nonprofit 501(c)(3) chid wefare organization founded in 1983 to work for safety and permanence in the ives of foster chidren. For more information about the Adoption Exchange, visit www.adoptex.org. The Dave Thomas Foundation for Adoption is a nationa nonprofit pubic charity dedicated excusivey to finding permanent homes for the more than 130,000 chidren waiting in North America s foster care systems. Created by Wendy s founder Dave Thomas, who was adopted, the Foundation impements evidence-based, resuts-driven nationa service programs, foster care adoption awareness campaigns, and advocacy initiatives. To earn more, visit davethomasfoundation.org or ca 1-800-ASK-DTFA. 40
www.davethomasfoundation.org www.adoptex.org www.nefe.org