Adoption, Surrogacy and IVF: Budgeting and Legal Planning Tips for Lgbtq+ Families

When the Supreme Court made marriage equality law of the land in 2015, it opened the door for more LGBTQ+ couples to pursue parenthood on equal legal footing. Since then, interest in family building has grown significantly within the community.

In fact, a study a few years after the decision found that 63% of LGBTQ+ adults aged 18 to 35 were considering becoming parents or expanding their families. And a majority of those planning families expected to do so through methods like adoption or reproductive technology.

Each of these paths to parenthood offers opportunity – but also comes with complex legal, financial and emotional considerations. We’ll help you weigh the pros and cons, understand the costs and make informed decisions with smart budgeting and legal planning.

NAVIGATING THE PATHS TO PARENTHOOD: ADOPTION, SURROGACY AND IVF

Adoption

Same-sex couples are seven times more likely to adopt than different-sex couples. Adoption – through a private adoption, an adoption agency or the foster care system – can be a great way to realize your dreams of parenthood or expand your family, raising a child in need of a loving home.

Some of the most common challenges in the adoption process, like costs and potentially long wait times, are the same for gay and lesbian parents as they are for heterosexual couples. But you may face obstacles others don’t, including bias and discriminatory practices within some agencies. And some nations still prohibit international adoptions for same-sex couples.

Surrogacy

Having a surrogate carry and deliver a child is another way to build a family when natural conception or adoption isn’t possible. The typical process is what's known as gestational surrogacy, where the surrogate carries an embryo created through in vitro fertilization or IVF.

Surrogacy gives you and your partner the opportunity to have a genetic connection to your child and be involved in the pregnancy from start to finish. However, with complex medical procedures and legal issues involved, and several people and services required, surrogacy can be expensive.  

IVF

An increasingly common approach to IVF for lesbian couples is what’s called reciprocal IVF. One partner provides the eggs, and the other partner carries the baby. Reciprocal IVF lets both parents experience pregnancy and childbirth in some way, fostering strong bonds with the child – and each other.

The downsides to IVF? Like the other options, it’s expensive with potentially high out-of-pocket costs. The journey can also be long and emotionally taxing, especially if you or your partner are dealing with infertility. Outcomes with IVF can vary and there’s no guarantee of a successful pregnancy.

THE FINANCIAL REALITY OF FAMILY BUILDING FOR LGBTQ+ COUPLES

As you may have noticed, one common thread in all the avenues to family building for LGBTQ+ couples is the cost. Raising a family isn’t cheap – and starting one isn’t either. But just how much can you expect to pay?

A domestic adoption can cost between $20,000 and $45,000 depending on where you live and the adoption agency or independent attorney you choose. For an international adoption, the bill can jump to up to $70,000, depending on the birth country of the child.

The costs of gestational surrogacy can range from $100,000 to $200,000. Expenses typically include agency fees (which might include surrogate screening and legal fees that are otherwise paid separately), IVF or embryo implantation and base compensation plus health insurance and other payments to the surrogate. These payments could cover expenses like maternity clothing, travel to the clinic, childcare, help with housekeeping at the end of the pregnancy and even additional life insurance. A less expensive alternative for some is what’s called compassionate or altruistic surrogacy, where the surrogate – often a friend or family member – volunteers to carry the baby without compensation beyond necessary expenses.

The price tag for a single cycle of IVF can be between $15,000 and $20,000 and could exceed $30,000 if a donor egg is involved. However, many people require multiple rounds of IVF, with the average patient needing two to three cycles and spending close to $50,000. The base fee for medical treatment typically covers patient monitoring, egg retrieval, anesthesia, lab fees and embryo transfer. Additional costs can include stimulation medications and pre-implementation genetic screening or PGS, which is now used in 35% of IVF procedures in the U.S.

LEGAL PLANNING ESSENTIALS

Besides managing costs, LGBTQ+ parents often need to overcome legal hurdles that are unique to them – particularly in establishing parentage.

Some state laws may not recognize an LGBTQ+ parent as their child’s legal parent because of the patchwork of parentage laws around the country – and even having their name on the birth certificate isn't always enough. That means you may need to go through a court process called second-parent adoption, where the non-biological parent adopts the child of the biological parent and legally establishes parental rights. This situation could arise, for example, when one partner’s egg was used to conceive the child and the other partner didn’t contribute any genetic material.

Securing parental rights is also a must-do for couples using gestational surrogacy. Legal parentage isn’t assumed at birth. LGBTQ+ couples typically need a court order to be legally recognized as parents. A pre-birth order can allow you to make medical decisions from the moment of birth, ease insurance processing and coverage issues – and even ensure that your baby is discharged directly to you from the hospital. A post-birth order, while less convenient, may be necessary when state laws don’t allow pre-birth filings or international surrogacy is involved.

The legal issues surrounding parental rights can be complicated. And they vary widely from state to state. That’s why it’s important to work closely with an attorney who’s experienced in navigating the process and knowledgeable about state parentage laws.

TAX BENEFITS AND FINANCIAL TOOLS TO USE

When it comes to financing a growing family, you may encounter a mixed bag of opportunities and challenges.

Parents who meet the eligibility criteria can take advantage of the federal Adoption Credit, which can offset costs including adoption fees, attorney fees, court costs and travel expenses. For the 2024 tax year, the maximum credit was $16,810. If you receive adoption benefits from your employer, you can exclude benefits up to this amount from your income. And like all parents of dependent children, you may be eligible for the Child Tax Credit of up to $2,000 per qualifying child.

From an insurance standpoint, things can get a little tricky. In general, marriage equality has helped provide more access to health coverage for LGBTQ+ couples. But while health insurance typically covers maternity and newborn care, coverage for IVF is not universal. Even in states that mandate coverage for IVF, you may still face high out-of-pocket costs. As for surrogacy, many insurance companies view it as a choice rather than a necessity and won’t cover surrogacy-related medical costs.

High potential out-of-pocket costs and insurance limitations make tools like health savings accounts and flexible spending accounts especially valuable when budgeting for IVF. HSAs feature a triple tax benefit: contributions are tax deductible, earnings are tax deferred and withdrawals are tax-free when used for qualified medical expenses – which include IVF costs. FSAs, offered through many employers, also allow pretax contributions to cover eligible medical or dependent care expenses.

CHOOSING TRUSTED PROFESSIONALS

With so many legal and financial complexities on the journey to family-building, working with the right professionals can make all the difference. Here are a few tips for choosing supportive partners that can enable a better experience:

• Look for adoption agencies and surrogacy coordinators who have experience with LGBTQ+ families, transparent pricing and clear communication. And ask for references or success stories from similar families.
• Watch out for red flags, like vague contracts, high-pressure tactics or professionals who seem dismissive, uncomfortable or reluctant to work with LGBTQ+ clients.
• Review contracts carefully and consider a second opinion before signing anything.
• Partner with legal and financial advisors who are not only welcoming and respectful of LGBTQ+ clients but also knowledgeable about topics like parental rights, donor agreements and budgeting for fertility and adoption expenses.
• Trust your instincts – if something doesn’t feel right, it probably isn’t. It’s OK to walk away and keep looking.

PLAN EARLY, PLAN SMART – CONNECT WITH AN ADVISOR

There may be some bumps along the road, but LGBTQ+ couples ready to build a family have multiple pathways to parenthood and many places to find professional support and guidance. We can help you create a financial strategy that incorporates family planning goals and design a budget that works for you – so you can look to the future you imagine with confidence.