It will take planning, but it can be done.
Adoption is expensive.
The U.S. Department of Health and Human Services estimates costs of adoption to be anywhere from a few hundred dollars to more than $40,000.
And that does not include feeding, clothing and educating your newest family member.
A recent article in Biz Times, titled "Getting your finances ready for adoption," says to prepare for your new child, you have to do your homework.
The truth is paying for the paperwork and document processing for adoption could take a toll on your financial future, but you can stay on track with retirement goals, save for college and provide for daily living.
Well, lucky you! I just happen to have a few suggestions from the original article as you move forward.
Examine your finances.
Understand the tax benefits of adoption.
There are tax benefits for adoption?
Actually, yes, the federal government has tax breaks for adoption.
But there is a catch.
When seeking these benefits, you need to do your homework and know the rules.
Here are a few:
According to the IRS, tax benefits for adoption include both a tax credit for qualified adoption expenses paid to adopt an eligible child and an exclusion from income for employer-provided adoption assistance.
The credit is nonrefundable, so it is limited to one's tax liability for the year. Any credit in excess of tax liability can be carried forward for up to five years.
In addition, adoptions of special needs children may qualify for special tax treatment.
Look into workplace benefits.
A recent study showed that about 12% of U.S. employers offered a financial adoption benefit in 1990, compared to 52% now.
And that is a significant increase in your odds.
See if your employer offers adoption benefits and factor those benefits into your overall financial plan.
Gauge your legal costs.
This is a legal process.
You will need to consult with an attorney to make sure your application is in order and your rights are protected.
Networking and education.
As the saying goes: it takes a village.
A huge advantage in this process is getting involved with support and planning groups for parents of adopted kiddos and those who are planning to adopt.
I cannot stress how important it is to take the time to do sound financial planning as you begin the adoption process.
So, yes, by advanced planning, you can grow your family without depleting your nest egg.
Remember: “An ounce of prevention is worth a pound of cure.” When making your financial, tax and estate plans, do not go it alone. Be sure to engage competent professional counsel.
For more information about estate planning in Overland Park, KS (and throughout the rest of Kansas and Missouri), visit our estate planning website and be sure to subscribe to our complimentary estate planning e-newsletter while you are there.
Reference: Biz Times (May 3, 2016) "Getting your finances ready for adoption"