Couple planning to to grow their family and discuss adoption, surrogacy and in vitro.

June 12, 2019

Adoption, In Vitro, Surrogacy: How to Plan for the Costs of Growing Your Family

When Brett Cloninger-West, a real estate agent with McEnearney Associates in Washington, D.C. went on a first date in 2006 with his future husband, Matt, they spent more than seven hours together. Among the things they appreciated about each other was their mutual desire to have children.

“Five years later, we were in Provincetown on what turned out to be a family weekend and met a gay couple with a child who shared their adoption story with us and gave us great advice," said Brett.

Two years and about $45,000 later, the Cloninger-Wests brought home their adopted daughter, Libby.

Financial planning to start a family can be particularly important for LGBTQIA+ families, who are more likely to be raising adopted children and children born with the help of a surrogate or in vitro fertilization (IVF). Same-sex parents are also significantly more likely than different-sex couples to be raising adoptive or foster children, according to research from the Williams Institute. In 2016, among couples with children, the research showed that 21.4 percent of same-sex couples were raising adopted children, compared to just 3 percent of different-sex couples.

“Financially, it's hard to know how much to save for a family," said Brett. “Our greatest financial ally was a financial advisor we met during premarital counseling who suggested we create a savings plan specifically for a future child."

The Cloninger-Wests saved money in their “adoption fund" from 2008 to 2011, which gave them enough to start the process, and then continued to save diligently during the two-year adoption process.

The Financial Reality of Adoption, In Vitro, and Surrogacy

Kerry Michael Finn, senior trust advisor with City National Bank, has personal experience with the expense of both IVF and adoption.

“My wife and I have spent more than $100,000 on IVF, which costs about $15,000 to $20,000 per attempt," he said. “We're expecting a child in a few months, a little girl. We're also in the midst of adopting our son, which will become final later this year."

A private adoption can cost from $5,000 to more than $40,000, according to the Williams Institute. Finn and his wife spent about $5,000 for their adoption because they first became foster parents for their son.

“We went through the state of California, so our son's medical care is covered until the adoption is formalized and we even have a small stipend from the government until he turns 18," said Finn. “But there was also much less certainty that we would be able to keep him, because the birth parents could have taken him back during the first eight months when we were fostering him. My sister-in-law and her wife were in the process of adopting twins and had been caring for them for seven months when their grandmother decided she wanted them back. Now they have successfully adopted two other children."

While there's an emotional cost to IVF, adoption and surrogacy, the financial burdens can also include unexpected expenses.

Travel requirements can add to the cost of adoption, said Finn, who knows a couple who adopted siblings from Guatemala but were not allowed to bring them back to the U.S. together. The couple had to make several international trips before their family was complete.

The Cloninger-Wests worked with an adoption agency with offices in New York and Vermont, which meant they made several trips and had to stay in the area for several days when their daughter's birth mother delivered the baby.

“The adoption agency told us upfront how much everything would cost and what the process entailed, including a home study, a criminal background check, an FBI check and a DMV check," said Brett. “Our finances were scrutinized, too, including our income, debt, savings and retirement funds. We felt the most vulnerable when they were reviewing our finances. It felt like an adoption strip search."

Their adoption agency required an initial installment payment for the background checks and then a second installment to pay for a book of photos of the couple and information about them that could be reviewed by potential birth mothers. The final installment paid for the legal work, adoption fees and birth mother's care.

For couples who choose to create a family with the help of a surrogate, the Williams Institute research said expenses can reach nearly $150,000.

How to Plan for Family Planning Expenses

While not everyone in their 20s is financially forward-thinking, Finn started saving money for a hoped-for future child when he was 23.

“I put $100 a month into an account for my future kids and then $100 more per month when I could afford it and eventually I opened a conservative investment account," he said. “It's lucky I saved money because that pool of funds helped us pay for IVF and for the adoption."

Some insurance companies pay for part of the cost of fertility treatments and employers can sometimes be a source of financial support.

“City National Bank reimburses employees for adoption expenses, too," Finn said. “Some of the tech companies, in particular, are paying for their employees to freeze their eggs because the employees want to delay starting a family while they focus on their careers."

Other sources of funds for a surrogate, IVF or adoption? Finn suggested the “Bank of Mom and Dad" or the “Bank of Grandma and Grandpa," because these relatives often want to support the growth of their family.

“You can look into borrowing to pay for a child, but you really need to know what you're getting into and whether you can afford it," said Finn.

If you withdraw from a 529 plan that you've established for a future child, you'll pay a tax and penalty for using the funds for something other than education, he noted.*

If you have sufficient home equity, a home equity line of credit is an option, said Finn, but it's important to make sure you can afford the payments.

Medical loans and personal loans tend to have higher interest rates than a home equity loan and require good credit to qualify, but they are usually a better option than a high-interest credit card.

“If you're desperate and don't have savings, borrowing is an option but you need to figure out how you'll repay the debt," said Finn. “More people should think about saving money sooner and save for other things besides retirement."

The Cloninger-Wests continued to save after the adoption to pay for child care costs and education, possibly to include private school. They agreed that once they reached one savings goal, it was time to create another goal.

“You save for a house and you save for a car," said Brett. “It makes sense to save for a living, breathing person who will be with us forever."

Creating a Plan That's Right for Your Family

When preparing to bring a child into your life, planning for the expenses of IVF, adoption or surrogacy, as well as general child-rearing expenses and your long-term financial goals, can be overwhelming.

City National Bank's wealth planners can help you create a comprehensive wealth plan that helps you fund the costs of growing your family and also takes into account your long-term goals. To learn more, contact us.

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