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3 LGBTQ+ parenting financial challenges

Amy Fontinelle

Posted on June 22, 2023

Amy Fontinelle is a personal finance writer focusing on budgeting, credit cards, mortgages, real estate, investing, and other topics.
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Outline the costs that many same-sex parents incur, including adoption, fertility services, and legal fees.

Highlight tax breaks and benefits that may help ease the financial burden of starting a family.

Explain how life insurance and disability income insurance may help protect your loved ones.

All families face financial challenges: Raising a child is expensive. But many LGBTQ+ parents also encounter obstacles related to outdated laws and customs, discrimination, and the added costs of:

But there are opportunities for LGBTQ+ families and aspiring parents to help offset those expenses. These include:

The following provides a closer look at these struggles and opportunities.

1. Adoption expenses

In 2021, an estimated 1.2 million same-sex couples were raising children in the United States, according to the U.S. Census Bureau’s American Community Survey data.1 Same-sex couples are four times more likely (43 percent) than opposite-sex couples (11 percent) to have adopted children.2

Whether parents adopt from a state agency, private agency, international agency, or private placement (where birth parents work directly with adoptive parents, without an agency), adoption costs money. Costs can range from next to nothing to adopt from a state foster care agency to tens of thousands for an international or domestic adoption through a private agency. Some agencies use an income-based sliding scale to help keep expenses affordable. (Related: Adoption: 5 financial considerations)

If your partner already has a child or children from a previous relationship that you want to adopt, agency and private placement fees obviously aren’t an issue. Attorney’s fees for second-parent adoptions can cost a few thousand dollars, and court fees, paperwork filing fees, and post-placement assessment fees (where required) will increase that cost slightly.

Don’t be tempted to save money by skipping the adoption process. Russell D. Knight, a family lawyer in Chicago, said he pleads with all LGBTQ+ parents to adopt the children that are not theirs biologically because most family law was written before LGBTQ+ parents were considered. Even with recent changes, state laws are a patchwork that does not adequately safeguard everyone’s rights.

What does that patchwork look like?

Sixteen states specifically allow second-parent or co-parent adoptions for unmarried couples, according to the National Center for Lesbian Rights. Unmarried same-sex couples may also be allowed to complete a second- or co-parent adoption in certain counties in other states. For various reasons, same-sex parents are not always married and may not wish to marry. And adoption agencies in some states can legally refuse to work with same-sex couples on religious grounds.

Despite the struggle and the costs to adopt, the reward is worth it for couples who want to enjoy the dual benefit of expanding their families and providing a permanent home for children whose biological parents may not be caring for them.

2. Assisted-reproduction expenses

Male-female couples can certainly face reproductive difficulties and the associated considerable medical expenses. The National Center for Health Statistics reports that 12.2 percent of surveyed women aged 15–49 said they had used an infertility service at some point.3

Nick (Yu) He and his husband, Bryan Koehler, went through the surrogacy process twice to have their three daughters. He enumerates their challenges in his book, “Two Dads and Three Girls.” The couple’s 2016 expenses for their first child included a surrogate agency fee ($8,500), egg donor fee ($1,500), gestational surrogate fee ($26,500), and clinic fee ($40,000 for unlimited embryo transfers), plus thousands on donor and surrogate blood tests and genetic tests.

Despite the financial and legal hurdles, assisted reproduction is a desirable option for creating a biologically related child with one parent’s genes. LGBTQ+ couples who want biological children may feel that having a blood connection far outweighs the frustrations and costs. (Related: How new parents can start budgeting for their kids)

3. LGBTQ estate planning

Estate planning is important for all parents. But for LGBTQ+ parents who aren’t married to each other or who live in states whose laws don’t protect their rights, it is extra important. Depending on your state’s laws and your family’s structure, dying without a formal estate plan could mean that your assets could go to a parent, sibling, aunt, uncle, or distant relative instead of to your partner or the child you’ve been raising together.

For LGBTQ+ parents, estate planning is indispensable for helping to make sure children and partners or spouses will be provided for and lives will not be disrupted, particularly if a family member who doesn’t approve of the couple’s circumstances might try to claim custody when one parent, especially a biological parent, dies. It’s another extra hurdle for LGBTQ+ couples to jump through, but since the legal system does not fully protect these parents’ rights in every state, it’s worth the hassle and expense for the peace of mind and protection. (Related: Estate planning for gay couples)

Now for some possible solutions to the financial challenges LGBTQ+ parents can face.

1. Take advantage of tax opportunities.

The adoption tax credit is not just available to parents who successfully adopt but also to parents who try to adopt. You can deduct reasonable and necessary expenses directly related to a child’s adoption, such as adoption fees and court, attorney, and travel costs. In 2022, the maximum credit is $14,4890 for each eligible child.

If cost is a major barrier to traditional adoption and if a couple is willing to adopt a child who may be older, adopting from foster care is a possibility. It can be affordable thanks to the adoption tax credit, cash subsidies, and Medicaid benefits. In 2019, same-sex couples were more than eight times more likely to be raising a foster child than male-female couples.(Related: 6 tax breaks for parents)

Heterosexual parents may also enjoy these benefits, but LGBTQ+ families are more likely to use them because of their higher adoption rates. LGBTQ+ parents are seven times more likely to be raising an adopted child, according to American Community Survey data.5

2. Look into workplace and health insurance benefits for adoption and infertility.

Employers may provide adoption benefits of up to $14,890 in 2022 that employees don’t have to pay federal income tax on (but FICA tax is still due). About 10 percent of employers provided such a benefit in 2019, according to the Society for Human Resource Management.

Parents may claim both the adoption tax credit and the employer adoption benefit tax exemption, but they can’t double dip and claim both for the same expenses. The two benefits combined can provide relief for nearly $30,000 in adoption expenses per child.

Health insurance coverage for infertility and the types of treatment covered vary by state and requirements to meet an insurance policy’s definition of infertility can exclude same-sex couples from this coverage.

3. Apply for family-building grants.

Because adoption and infertility treatments can be so expensive, various trusts, foundations, and nonprofits offer grants to parents who meet their criteria. Family Equality, a non-profit advancing legal and lived equality for LGBTQ++ families, publishes a list of LGBTQ+-friendly grants to help would-be parents make their dreams a reality.

Other sources families may use to pay for adoption include financial gifts from friends and family, home equity loans, adoption-specific loans, and retirement funds. (Related: The risks in borrowing from your retirement plan)

4. Get insured.

For many couples, the decision to start a family is deliberate and intentional. It’s important to be just as deliberate and intentional about protecting your family with life and disability income insurance. These policies can provide financial support for a spouse or partner and children if the unexpected happens. (Related: Why you should get disability insurance and life insurance)

In particular, while everyone can benefit from carrying disability income insurance, it may be especially important for LGBTQ+ families.

“Disability income insurance helps protect one of our greatest assets, our ability to earn an income,” said Marguerita Cheng, chief executive officer of Blue Ocean Global Wealth in Gaithersburg, Maryland. “The children of LGBTQ+ families may incur roadblocks when it comes to receiving Social Security disability benefits, especially when it pertains to second-parent adoption. It’s important to be cognizant of these nuances.” (Calculator: Disability income insurance)

As far as life insurance, Cheng thinks about it in terms of three Ls:

  • Love: Protect your loved ones.
  • Loans: Pay off debt. “In addition to loved ones experiencing emotional loss, you don’t want them to experience financial loss and the instability and stress that ensue,” she said.
  • Legacy: Leave an inheritance for loved ones or support for a favorite charity, non-profit, or community-based organization.

There are two basic categories of life insurance. Term insurance tends to be the least expensive, since it provides basic protection for a set period of time. Permanent insurance offers coverage over a lifetime and various added financial features, depending on the type. (Calculator: How much insurance do I need?)


Forty-five to 53 percent of LGBTQ+ millennials are considering expanding their families, either by becoming first-time parents or having more children, according to Family Equality.6

LGBTQ+ parents may face financial hurdles that cisgender, heterosexual parents don’t. But with mutual help from their partners, support networks, advocacy groups, and medical professionals, these obstacles can be managed. Working with a financial professional who understands the challenges of LGBTQ+ parents’ family finances can pay off by helping to prevent mistakes and maximize opportunities.

Discover more from MassMutual...

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This article was originally published in June 2019. It has been updated.



United States Census Bureau, “Same-Sex Couple Households: 2021,” May 25, 2023.

United States Census Bureau, “Fifteen Percent of Same-Sex Couples Have Children in their Household,” September 17, 2020.

Centers for Disease Control and Prevention, ”Infertility,” Dec. 7, 2022.

United States Census Bureau, “Same-Sex Couples Are More Likely to Adopt or Foster Children,” September 17, 2020.

5 United States Census Bureau, “Same-Sex Couples Are More Likely to Adopt or Foster Children,” September 17, 2020.

Family Equality, “Building LGBTQ+ Families: The Price of Parenthood,” December 2019.

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The information provided is not written or intended as specific tax or legal advice. MassMutual, its subsidiaries, employees and representatives are not authorized to give tax or legal advice. You are encouraged to seek advice from your own tax or legal counsel. Opinions expressed by those interviewed are their own and do not necessarily represent the views of Massachusetts Mutual Life Insurance Company.