Adoption

Texas Estate Planning for Adoptive Parents

Published on: January 11, 2021 | By McCulloch & Miller, PLLC

There are unique challenges that families with adopted children face; however, most of these families do not know that estate planning is one of them. A Houston estate plan is essential for all people, but especially for families with adopted children because of the different laws they are subjected to. Texas law treats families differently, based on whether the children are legally adopted or not. Below are various estate planning and inheritance situations, all of which depend on the legal make-up of a person’s family.

Legally Adopted Children

When children have been legally adopted into the family, they have the same legal rights as biological children. This includes equal rights in estate planning situations, and biological and adopted children will receive the same inheritance and property when their parents have passed away. Therefore, legally adopted children will be treated the same if the parent has a will and trust in place. This occurs even if the adoption is finalized after the will or trust has been created.

Houston Estate Planning Considerations for Adoptive Parents

Published on: June 19, 2020 | By McCulloch & Miller, PLLC

Houston families with adopted children have to keep certain concerns in mind while estate planning. If a child is not formally and legally adopted, that child generally will not receive the same treatment in the event of a parent’s death. Inheritance and property will not usually pass on to that child in the same way that they would to a biological child. Adoptions can take a long time to become final. Until an adoption has been finalized, the child is not considered a child in the same way that a biological child is for estate purposes.

For example, a stepchild who was raised by a stepparent may be considered the same as a natural child within the family, but if the stepchild was not legally adopted by the stepparent, the child will not be treated in the same way under Texas estate law. In the event of the stepparent’s death, Texas estate law would not treat that child the same as a biological child. This means that if the stepparent died without a will, generally, the stepchild would not inherit any of the stepparent’s assets. However, there are some circumstances under Texas law in which a child can inherit from a stepparent and where there was an agreement to adopt the child.

If a parent legally adopts a child, under the Texas Estates Code, that child will be treated in the same way as a natural child. In the event of a legal adoption, generally, the child’s biological parents’ parental rights will be terminated. In some cases, that child will lose their right to inherit by default as a child from their biological parents. However, in Texas, an adopted child normally can also inherit from the child’s natural parents.

Adopting? Congratulations! First, Your Financial Homework

Published on: May 17, 2016 | By McCulloch & Miller, PLLC

Financial planning needs to be part of the equation when doing all of the work involved in bringing a new family member into your lives.

The cost of adoption can start at a few hundred dollars or it can easily exceed $40,000, according to the U.S. Department of Health and Human Services. There are many different ways of adopting a child into your home, but however your adoption occurs, you need to do some financial planning.

Biz Times' recent article, "Getting your finances ready for adoption," says that in order to get your finances ready for adoption, you have to do your homework and be certain the price and processing work of adoption won't wipe out your plans for essential financial goals like retirement, saving for your future child's education, and higher daily living expenses with a new family. Begin with these tips:

Cost of Adoption Can be Offset with Tax Credits

Published on: November 20, 2015 | By McCulloch & Miller, PLLC

The average family can face high expenses when adopting a child. But there are tax benefits that will provide some help, as reported in The Middlesboro (KY) Daily News article, "Thinking of adopting? Be prepared for expenses." Among the benefits are an exclusion from your taxable income of employer-provided adoption assistance and a credit for qualified adoption expenses.

The maximum tax benefit you can claim for this year is $13,400, which is reduced if your modified adjusted gross income (MAGI) exceeds $201,010 and is completely phased out if your MAGI is $241,010 or more. The adoption tax credit is nonrefundable, so it's limited to your tax liability for the year.

For example, say that you pay $13,400 in qualified adoption expenses in 2015, and your employer reimburses you for $3,400. If you meet the MAGI guidelines, you can exclude $3,400 from your gross income for 2015 and can claim $10,000 ($13,400 minus $3,400) for the adoption tax credit.