3 LGBTQ parenting financial challenges

Amy Fontinelle

By Amy Fontinelle
Amy Fontinelle is a personal finance writer focusing on budgeting, credit cards, mortgages, real estate, investing, and other topics.
Posted on Jun 24, 2019

All parents face the same financial challenge: Raising a child is expensive. However, the costs can start adding up sooner with the medical expenses leading up to having that child, including in vitro fertilization, or the expenses related to adoption or other options in starting or augmenting your family.

But LGBTQ parents can face further financial challenges including struggles related to adoption, assisted reproduction, outdated laws and customs, and discrimination.

For an LGBTQ parent or aspiring parent, common financial challenges often arise in:

1. Adoption expenses

2. Assisted reproduction expenses

3. Estate planning

These challenges often involve legal complications as well. But there are opportunities for LGBTQ parents and aspiring parents to help offset costs. These include:

1. Tax breaks

2. Workplace benefits

3. Grants

4. Insurance

The following looks at the challenges and opportunities in more detail.

1. Adoption expenses

In 2016, an estimated 114,000 same-sex couples were raising children in the United States, according to American Community Survey data. While the majority (68 percent) of these couples were raising biological children, they were far more likely than male-female couples to be raising an adopted child (21.4 percent vs. 3.0 percent).1

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. Domestic newborn adoptions cost an average of $40,000 in 2016–17, according to the most recent survey results available from Adoptive Families magazine. International adoptions cost an average of $44,000.2

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 even considered. Even with recent changes, state laws are a patchwork that does not adequately safeguard everyone’s rights.

What does that patchwork look like? Fifteen 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 not be allowed to complete a second- or co-parent adoption in some 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 challenges and the associated considerable medical expenses. The National Center for Health Statistics reports that from 2011 to 2015, 6.7 percent of women ages 15 to 44 were infertile.But for same-sex couples (trans couples excepted) who want to have a biological connection to a child that they raise together from birth, assisted reproduction is the only option.

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 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 obstacles, assisted reproduction is a desirable option for creating a biologically related child with one parent’s genes and being able to raise a child from birth. LGBTQ couples who want biological children may feel that having a blood connection far outweighs the challenges and costs.

Related: How new parents can start budgeting for their kids

3. 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/spouses will be provided for and lives will not be disrupted, especially 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 seems unlikely to fully protect these parents’ rights in every state any time soon, it’s worth the hassle and expense for the peace of mind and protection.

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 2019 , the maximum credit is $14,080 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 2016, same-sex couples were more than six times as likely to be raising a foster child than male-female couples.4

Heterosexual parents may also enjoy these benefits, but LGBTQ families are more likely to need them because of their higher adoption rates. LGBTQ parents are seven times more likely to be raising an adopted child, according to the Family Equality Council, a New York–based nonprofit advancing equality for LGBTQ families.

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

Employers may provide adoption benefits of up to $14,080 in 2019 that employees don’t have to pay federal income tax on (but FICA tax is still due). About 11 percent of employers provided such a benefit in 2018, 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 up to $28,160 in adoption expenses per child.

Health insurance coverage for infertility and the types of treatment covered vary by state and the language in state laws can exclude same-sex couples from these benefits (or make it expensive to meet those laws’ definitions) and exempt small employers and self-insured employers from offering them.

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. The Family Equality Council publishes a list of LGBTQ-friendly grants to help would-be parents make their dreams a reality.

The Adoptive Families survey revealed other sources families use to pay for adoption : financial gifts from friends and family, home equity loans, adoption-specific loans, and borrowing from a retirement fund.

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 help provide a steady income for a spouse or partner and children if the unexpected happens.

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."

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.

Related: Why you should get disability income insurance and life insurance


Sixty-three percent of LGBTQ millennials are considering expanding their families, either by becoming first-time parents or having more children.5

And LGBTQ parents may face financial challenges that heterosexual parents don’t, but with mutual help from their partners, support networks, advocacy groups, and medical professionals, these challenges 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...

MassMutual LGBTQ Center

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The Williams Institute, UCLA School of Law, “How Many Same-Sex Couples in the. U.S. Are Raising Children?“ July 2018.

Adoptive Families , “Adoption Cost and Timing in 2016–17,” 2018.

Centers for Disease Control and Prevention, National Center for Health Statistics, National Survey of Family Growth, Infertility table.

The Williams Institute, UCLA School of Law, “How Many Same-Sex Couples in the. U.S. Are Raising Children?“ July 2018.

Family Equality Council, “LGBTQ Family Building Survey,” March 12, 2019.

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.