And baby makes three

Q: My husband and I are planning to adopt a baby! As hopeful same-sex parents, we want to begin thinking about our short- and longer-term planning. Can you offer any thoughts to get us on the right path financially?

A: First, my best wishes for you both on potentially adding one more to your family. There are certainly many things to consider, both now and as you get closer to your baby’s arrival. Here’s a brief guide to get you started. Best of luck!


Starting a family can be one of life’s most fulfilling experiences. It can also be among the most expensive. According to statistics compiled by the U.S. Department of Agriculture, families in the United States could spend well above $200,000 for food, shelter and other necessities to raise a child through age 17 — and that doesn’t include college! 

As you consider your growing family’s financial needs, take a look at some key areas to address before and after your new child comes home. This handy checklist can help you get a head start on planning.

Begin budgeting 

  • To be baby-ready, you’ll need some basics: a crib, changing table, car seat, carriage, infant clothes and more. Also, factor in the costs for any home renovations you may want, like a nursery or a bathroom upgrade.
  • Paying for medical care can increase your monthly spending; prepare to cover any copays for visits to the pediatrician, for example. Also consider the need for baby food; new clothing as the baby grows; diaper services or supplies; and, eventually, potential expenses for childcare, babysitting and preschool.
  • Think about how your income might change if you, your spouse/partner or both of you choose to reduce your work hours. Compare the benefits and costs of stay-at-home parenting with paying for childcare.

Review your health-insurance coverage

  • The medical costs of bringing a new life into the world can add up, and insurance coverage varies widely. Check with your health-care provider or human-resources office about any copayments, coinsurance and/or deductibles you can expect, and be sure that you’ve met all the terms of the insurance contract.
  • Determine whether your preferred obstetrician and pediatrician will be considered in-network or out-of-network for insurance reimbursement and referral purposes. A provider’s status in your insurance plan may affect not only your out-of-pocket costs but also your access to hospitals, imaging centers and laboratories.
  • Many policies have specific procedures for adding coverage for dependents. To be sure that you have uninterrupted coverage for your new addition, check with the company beforehand.

Explore employer-sponsored benefits

As a starting point, determine whether the birth of a child is considered a qualifying life event (QLE) by your employer. If so, normal open-enrollment restrictions may not apply. Then, if available to you, consider the following benefits:

  • A health savings account (HSA). An HSA may allow you to accumulate health-care reserves on a pretax basis to pay for future medical expenses.
  • A dependent-care flexible spending account (FSA). This benefit, if offered, lets you set aside money each pay period on a pretax basis to pay for qualified child-care expenses. Take care to contribute only what you are sure you can use each year because any money remaining in the account after the benefit period ends generally would be forfeited.
  • Maternity/paternity leave. Companies must generally offer their employees some time off around the birth of a child. Your human-resources or personnel office can explain your benefits and how to qualify for them.
  • Job-sharing and telecommuting opportunities. Caring for a newborn is a lot of work. If you are considering adjusting your time on the job, look into these potential options.
  • Adoption benefits. If you are adopting a child, you may be eligible for an adoption credit, and/or your employer may provide qualified-adoption assistance that is potentially excludable from your gross income.

Review existing legal/estate plans

  • If you are adopting a child and/or only one of you will be the biological parent of your child, please seek legal counsel from a qualified attorney who regularly deals with these issues to make sure your family is properly protected.
  • Be sure your new child is accounted for in your will and in your spouse/partner’s will. If you assigned shares of anything by percentage, make sure those percentages are updated to reflect your intentions.
  • If you have existing guardianship arrangements, be sure to explicitly include your new child. Consider designating a guardian if you have not done so.
  • Be sure that any retirement-account beneficiary designations accommodate your new child’s interests.
  • A new family member means a potential new life-insurance beneficiary. Are your beneficiary designations up to date? Do you and your spouse/partner both have enough insurance coverage to accommodate your growing family? 

Begin saving for college 

Given the high cost of a college education, it’s probably not an overstatement to say you can never start saving too soon. Here are a few tools that can help:

  • A 529 college-saving plan offers you generous contribution limits, flexible withdrawal rules and potential tax savings.
  • A custodial account may offer potential estate-tax and gift-tax planning benefits.
  • A Coverdell education savings account can be used to fund certain elementary-school, high-school or college expenses.

Advanced planning on a number of financial fronts can help ensure that your new addition to the family has a smooth and secure start in life. 

Jeremy R. Gussick is a CERTIFIED FINANCIAL PLANNER™ professional affiliated with LPL Financial, the nation’s largest independent broker-dealer.* Jeremy specializes in the financial planning and retirement income needs of the LGBT community and was recently named a 2017 FIVE STAR Wealth Manager as mentioned in Philadelphia Magazine.** He is active with several LGBT organizations in the Philadelphia region, including DVLF and the Independence Business Alliance, the Philadelphia region’s LGBT Chamber of Commerce. OutMoney appears monthly. If you have a question for Jeremy, you can contact him via email at [email protected]

1Asset allocation does not assure a profit or protect against a loss. Rebalancing a portfolio may create a taxable event if done outside a retirement account.

This article was prepared with the assistance of DST Systems Inc. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. We suggest that you discuss your specific situation with a qualified tax or legal advisor. Please consult me if you have any questions. LPL Financial Representatives offer access to Trust Services through The Private Trust Company N.A., an affiliate of LPL Financial.

Because of the possibility of human or mechanical error by DST Systems Inc. or its sources, neither Wealth Management Systems Inc. nor its sources guarantees the accuracy, adequacy, completeness or availability of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. In no event shall DST Systems Inc. be liable for any indirect, special or consequential damages in connection with subscribers’ or others’ use of the content. 

To the extent you are receiving investment advice from a separately registered independent investment advisor, please note that LPL Financial LLC is not an affiliate of and makes no representation with respect to such entity 

Securities and Advisory Services offered through LPL Financial, a Registered Investment Advisor, Member FINRA/SIPC.

*As reported by Financial Planning magazine, June 1996-2017, based on total revenues.

**Award based on 10 objective criteria associated with providing quality services to clients such as credentials, experience, and assets under management among other factors. Wealth managers do not pay a fee to be considered or placed on the final list of 2016 Five Star Wealth Managers.