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Personal Finance
Financing an adoption
April 5, 1999: 12:12 p.m. ET

'Hidden' costs can add to the price of an adoption, but financial help is available
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NEW YORK (CNNfn) - When it comes to soft, cuddly babies, talk of cold, hard cash may seem less than appropriate.
     But for the thousands of would-be parents looking to adopt a child, money is an important consideration.
     While people tend to overestimate the importance of income when being evaluated as prospective moms and dads, they may not fully take into account how much an adoption may cost them.

    
Initial fees

     The type of adoption you pursue will largely determine its cost. Public adoptions, for example, tend to be far less expensive than private ones, because financial assistance is much more widely available for families who take children out of foster care. Up-front fees and expenses for a public adoption run from zero to $2,500, with federal assistance also available to cover expenses related to the rearing of the child.
     Private adoption agencies, which generally place children born locally or from other countries, charge anywhere from $4,000 to $30,000. That fee typically includes a home study, pre-adoptive counseling, identifying a child for your family, placement fees and post-placement visits.
     International adoptions may have additional costs, such as visas, dossier preparation, and document translation.
     In an independent adoption, the birth mother's living and delivery expenses may also be included, and an independent home study, ranging from $300 to $3,000, is not unusual. Overall, an independent adoption is comparable in cost to a private adoption, ranging from $8,000 to $30,000, although the price of an independent adoption may be less predictable.
     Although the cost of an adoption can range vastly, the extremes are related to the circumstances of the adoption, and not necessarily to the quality of the agency.
     If a baby was born to a mother with good medical benefits, for instance, the costs of her delivery and pre-natal care will already have been accounted for, making an adoption less costly. However, if you have to travel to another state to get your child, the process could be more expensive.
     There is also no link between the cost of an adoption and the time in which you will receive a child.

    
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     "Speed has nothing to do with money. I think people make the mistake of choosing an agency according to who says it will be fastest," said Susan Freivalds, policy coordinator for the Joint Council of International Children's Services.
     Unfortunately, the availability of adoptable infants in the United States is driven largely by the marketplace, with many parents vying for a small number babies. The average waiting time in a domestic private adoption is 1 to 7 years, whereas an international adoption may be completed within 18 months. The waiting time in a public adoption can be shorter, depending on how well you connect with a foster child.

    
Evaluating an agency

     When choosing an adoption agency, cost should only be one factor, with instinct and research also considered.
     "We looked around and certainly there were some agencies that were cheaper than the one we chose, but they had a fly-by-night feeling to them," said Deanna Vincent, who with her husband adopted a nine-month old boy from Russia. "We were willing to spend a little more in order to use an agency that was reputable."
     In all cases, be clear about how much you are able to spend. While it is easy to brush aside cost when it comes to bringing a child into your life, your ability to provide for that child will be largely determined by your financial situation.

    
Costs

     Taking a loan to finance an adoption may be all right if a tax credit, reimbursement from your employer or some other windfall will enable you to pay it off in a short period of time. But accruing long-term debt as you adopt a child could add unnecessary psychological and financial stress to the situation.
     If forced to take a loan, try to find low-interest options, like borrowing against a mortgage, insurance policy or retirement fund. Some agencies have connections to banks, which can offer low-interest adoption loans, though they are not very common. Don't fund an adoption on your 18-percent interest credit card.
     Some private adoption agencies offer reduced charges based on income, so if your finances are somewhat limited, ask about sliding-scale fees.

    
Put it in writing

     Whatever type of adoption you choose, it is vital to clarify in advance -- and in writing -- what will be included in the fee, as Elizabeth and Daniel Case found out.
     Their Medina, Ohio-based agency advertised international adoptions at $17,500 apiece, but failed to mention a series of additional expenses that would be required as part of the adoption.
     Consequently, the Cases have racked up close to an additional $1,000 in "hidden" costs related to their adoption, including payments to the Immigration and Naturalization Service and the cost of getting international documents certified and apostilled (a notarization procedure required by some countries).
     Additional out-of-pocket expenses that can arise from the adoption procedure include travel to and from the agency's or lawyer's office; paperwork and photocopies; taking time off work for interviews; obtaining shots and passports if international travel is necessary; and child care for current children.
     "As you can see, this is not for the average Joe to do this," said father-to-be Daniel Case.
     Be wary of agencies that ask for considerable payment up front and ask about payment plans. In most cases, payments should be made as each step of service is provided.
     "I usually say a family should have paid about three-quarters of the cost by placement and shouldn't pay the remaining fee until just prior to finalization," recommends Ann Sullivan, adoption program director at the Child Welfare League of America.
     Sullivan also warns against agencies that promise they can get babies in a short amount of time or those that want you to sign disclaimers before meeting with you.

    
Financing a private adoption

     With private adoptions costing as much as $30,000, taking advantage of the financial resources available to you can be crucial to bringing an adopted child into your family.
     Your employer may be an unexpected source of financial help. About 25 percent of companies in the United States offer some form of adoption benefits, which may include a direct reimbursement of about $2,000 to $10,000, coverage for the medical expenses of the birth mother, and paid leave. Some employers may also offer adoption seminars and information classes, as well as counseling and support before and after placement. If your employer does not offer adoption assistance, contact the National Adoption Center at (800) TO-ADOPT for help in how to establish a program.
     In addition to employee benefits, all adoptive parents qualify for a $5,000 tax credit ($6,000 for "special needs" children) on their federal tax returns. The credit, which applies to both domestic and international adoptions, can be used toward "reasonable" expenses related to an adoption, such as agency fees, attorney bills and travel costs. The tax credit is progressively phased out for high-income families, starting with an adjusted gross income of $75,000. (IRS Publication 968)
     In addition to the credit, the IRS will exempt outside adoption assistance from your income. For example, you would not have to pay taxes on up to $5,000 ($6,000 for "special needs" children) of adoption assistance received from your employer.

    
Considering a public adoption

     The initial cost of an adoption can be drastically reduced if you go through a public agency. These agencies place "special needs" children, or "waiting" children, as they are sometimes called.
     Special needs children come from the foster care system and, contrary to popular belief, do not always have specific physical or mental disabilities. While many of them do face emotional or behavioral difficulties, others are categorized as "special need" because they are school-aged or because siblings need to be placed in a new home together. More than half of them are children of color, and some have physical and developmental disabilities.
     Children coming from foster care often have suffered parental abuse, neglect, or abandonment and may require special care once they are adopted, including special education classes, psychological counseling or tutoring. While public schools are required to provide these services, you may find yourself footing the bill for many of these sessions, if your child needs more than the school can offer.
     "The issue is not so much the cost of facilitating the adoption, but rather the support needed after the adoption," said Tim O'Hanlon of the Adoption Policy Resource Center. Special needs children "may have medical or emotional issues that are the result of pre-adoption issues."
     But these children can also be unfairly judged.
     "Not all special needs kids are challenging kids," said the CWLA's Sullivan. "Some kids desperately want a family and are exceedingly rewarding for their adoptive parents."
     Because of their unique backgrounds, the federal government provides special provisions to parents who adopt these children. Most notably, Title IV-E provides monthly cash subsidies to families who adopt special needs children.
     Although Title IV-E is a federally-funded program, individual state guidelines regarding which children qualify and how large each subsidy is vary. The financial standing of adoptive parents have no bearing on the child's eligibility for Title IV-E adoption assistance. Eligibility is strictly based on the child's situation before being placed into a permanent home. However, states may take the family income into account, along with the child's needs, when negotiating the actual amount of the subsidy with you.
     Children who qualify for Title IV-E are automatically eligible for Medicaid and may also qualify for social services benefits, such as specialized day care and counseling, under Title XX of the Social Security Act. To find out more about the programs in your state, contact the North American Council on Adoptable Children.
     Parents adopting special needs children are also eligible for a one-time, reimbursement of non-recurring adoption costs, including court costs, attorney bills, transportation expenses, and physical and psychological examinations. The reimbursement can be as much as $2,000, depending on the state.
     When applying for subsidies, be sure to receive agreements in writing before the adoption becomes final, as it can be very difficult to revise assistance after the adoption has been finalized.

    
The final decision

     Though money will inevitably play a role in the adoption process, it should not be the overriding factor.
     "The choice of what kind of child to adopt is very individual and shouldn't be based on financial concerns," emphasized Freivalds.
     More experienced parents may be better suited to special needs children than first-time mothers and fathers, for example.
     But regardless of what type of child you decide to adopt, be clear about what lies ahead, both financially and emotionally.
     "Don't let the deep desire to have a child blind you," Sullivan said. "It's important to go into an adoption with your eyes wide open." Back to top
     -- by staff writer Nicole Jacoby

  RELATED STORIES

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  RELATED SITES

Child Welfare League of America

The Evan B. Donaldson Adoption Institute

National Adoption Clearinghouse

Joint Council of International Children's Services

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Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.