Adoption is a wonderful way to share your love by bringing a child into your life. According to Ephesians 1.5 (ESV), “He predestined us for adoption to himself as sons through Jesus Christ, according to the purpose of his will.”

Starting a family is an expensive venture, especially when adoption is involved. Adoptive parents need to consider unique costs such as adoption fees, income tax implications and insurance coverage. These costs will vary depending on the type of adoption arrangement, the child’s age and circumstances, and whether the adoption is domestic or international. An example of adoption expenses expected can include:

  • Adoption agency or attorney fees
  • Court costs
  • Home study fees
  • Travel expenses
  • Birth mother expenses (includes medical and counseling expenses that are regulated by state law)

Financial planning in advance is so important so that you aren’t caught with some big surprises. It’s possible that you may have to come up with thousands of dollars to cover adoption costs. Do you have that amount of funds in reserve? If not, you will want to check into some alternative ways of covering the costs. Here’s where a financial planner can be of value. They’ll know of available adoption grants, federal tax credits, and state or federal subsidies offered through the foster care system.

Federal Adoption Tax Credit

It’s possible that you may be able to claim a tax credit for any expenses you have paid to adopt a child. Because tax credits reduce your tax liability dollar for dollar, claiming the adoption tax credit is very valuable. This year, 2023, you may be able to claim an adoption tax credit of up to $15,950 of qualified adoption expenses for each eligible child. In general, you can only claim a tax credit that is equal to your qualified adoption expenses, including adoption fees, court costs, attorney fees, traveling expenses and other expenses that are directly related to the adoption. Note that adopting a child with special needs allows you to claim the entire tax credit, even if your adoption expenses are less.

Another change to expect is in your various insurance policies. For example, you’ll be adding a child to your health insurance plan. Furthermore, adding a child to your family is the perfect reason to review and possibly increase your life insurance policy. It’s important that you protect your family’s financial security by having ample disability coverage should you become injured, sick or unable to work.

As you can see, it’s important to meet with your wealth advisor to discuss all your options regarding adoption. They will be able to provide you with a thorough breakdown of the advantages and expenses related to adoption.

In the Word

“He predestined us for adoption to himself as sons through Jesus Christ, according to the purpose of his will.” 

Ephesians 1:5

This verse is a powerful reminder of God’s incredible love and grace towards us. It reveals that before the foundation of the world, God chose us to be His children, adopting us into His family through the sacrifice of Jesus Christ. We can walk in confidence, knowing that we are chosen, accepted, and deeply loved by our Heavenly Father. It also challenges us to live out God’s purposes for our lives, aligning our will with His and seeking to fulfill His divine plan.


Sources: Broadridge Investment Management Solutions

Stone Oak Wealth is regulated by the SEC as a registered investment adviser. Please see visit Legal Disclosures for additional advertising disclosures.