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Options For Financing An Adoption

 October 9, 2014  /  Comments Off on Options For Financing An Adoption

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I am friends with a single woman who adopted a young boy from a Russian a number of years ago. I remember all the hoops she had to jump through to finally adopt. She really wanted to adopt a child but the process was stressful. And that didn’t even include the stress associated with financing the adoption. All the fees, transportation costs and other related expenses added up to a hefty sum.

She had been saving up for an adoption for several years and also had some financial support from her family. So at least she was prepared for the financial end of the endeavor. However, many couples looking to adopt don’t have the financial resources readily available to pay for an adoption. It is a pity when the only thing preventing a couple and a child from becoming a family is money.

For parents to be, one of the biggest hurdles to adoption is covering the adoption costs. As of 2010, according to Adoptive Families.com, the cost of a domestic adoption of a newborn can cost well over $30,000. It can be quite a bit more for an international adoption. However, there are a number of options available for individuals and couples looking to adopt.

Adoption Tax Credit

Taxpayers adopting a child might qualify for the adoption tax credit if they paid out of pocket expenses related to the adoption. The amount of the tax credit is related to how much money you spent on adoption expenses. The amount of the non-refundable tax credit for 2014 comes to $13,190. Should you adopt a special needs child, you will qualify for the full amount of the adoption credit, even if you paid less than the tax credit amount.

Options For Financing An Adoption

Adoption Loans or Grants

A number of credit unions offer loans specifically for adoptions, but you can find a number of online loan options for adoptive families. Grants are available to those who meet the application criteria. They may range from $1000 up to $10,000. This web page offers a number of loan and grant options that are available online.

Other Options

Employee Benefit Programs: Check with your employer to see if they offer adoption benefits. They may offer help with legal expenses, agency fees, and medical expenses. They may even pay for or allow for unpaid leave associated with the adoption process.

Life Insurance: Borrowing from a 401K or life insurance policy is another viable option for covering adoption expenses.

Home Equity Loan or Line of Credit:  Some couples take out a home equity loan or line of credit. Some prefer the line of credit option as it allows them more flexibility in paying back the funds. The interest on these may even qualify for a tax deduction. Check with your bank or tax person.

If you already have overloaded your credit limits and would like to adopt you may want to think about first getting your finances in order before you take on the added responsibility of a child. One option is to combine all of your outstanding loans into one loan. This way, you make one payment at an interest rate that allows you to pay less interest than you would have with a number of separate loans. Not all companies offering these services are the same, so compare debt consolidation companies to see which one best fits your situation.

Frank McCourt has been in the financial industry for most of his career. He currently is a loan originator for a medium sized bank and enjoys writing about loan options for a variety of needs.

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