In recent years the “adoption option” has become an increasingly popular and more acceptable way to start a family or to expand one’s family. Where some couples have turned to adoption due to infertility issues, others have used adoption as an opportunity to extend their love and resources to those other than their own biological children. Fortunately, there are now more adoption options available to Michigan couples and singles. Adoption forms a “legal relationship” with another person that is intended to be permanent. Therefore, those seeking to adopt should give serious consideration to the time, emotional involvement, commitment and cost associated with an adoption of any kind. The following information is intended to provide a brief overview of various adoption options and procedures.

Direct Placement

A direct placement adoption is one in which the child is “directly placed” with the adoptive parent(s) specifically chosen by the birth parent(s). This process is attractive to birth parents and adoptive parents for many reasons.

History of Direct Placement

Prior to the changes in state law that allowed direct placement adoptions in Michigan, birth parents released their parental rights to an adoption agency. In turn, it was the adoption agency that selected the adoptive couple or parent. Unfortunately, many adoption agencies had rigid and narrow requirements regarding the age, income, education, religion, sex, etc., of adoptive parents. Those people that did not meet an agency’s criteria were “discouraged” from entering the adoption process. Interestingly, those people that may not have met the criteria of a particular agency were being selected as adoptive parents by birth mothers in other states where direct placement was available. It appeared that birth mothers, simply looking for a loving stable home for the child, did not have the same narrow criteria as did some agencies. In addition, birth mothers who wanted more involvement in the process were choosing to give birth in states that allowed them (and not an agency) the opportunity to select the adoptive parents. Thus, many Michigan adoptive parents and birth mothers began to turn to other states in order to create a parenting plan.

However, in order to return home to Michigan with the child the adoptive parents were required to comply with the Interstate Compact on the Placement of Children Act (ICPC). Since obtaining ICPC approval could be a lengthy and expensive process Michigan residents and legislators began to push for the enactment of direct placement provisions in Michigan. Although the ICPC process was improved and streamlined in many ways (and is still required for interstate adoptions) direct placement in Michigan became effective in 1995. Under the new law, birth mothers can still “release” their parental rights to an agency to select the parents, but may now also “consent” to placement with the adoptive parent of their choice. In addition, both the birth mother and the adoptive parent can each be represented by private attorneys who will advocate for and protect the rights of each party.

Process of Direct Placement

In a direct placement adoption, the birth mother or birth parents may meet in a number of ways. Birth parents wishing to create a parenting plan may contact and meet with an attorney. The attorney can provide the birth parent with a variety of profiles of prospective adoptive parents from which to select. On the other hand, the adoptive couple and the birth mother may become aware of each other through family friends and associates. When this occurs, either the birth parent or adoptive parent may contact separate attorneys that would represent each of them in the process from that point forward.

After making a connection, the birth parents and adoptive parents can agree to communicate in a way that is comfortable for both. For example, the parties can either meet in person or establish a communication by telephone or e-mail. In some situations, the adoptive couple participates in prenatal care, birthing classes and perhaps even cut the umbilical cord in the delivery room. In other cases, the birth parent and adoptive parent may never meet in person or communicate. Such decisions are based upon what is desired by both the adoptive parents and the birth parents.

One important requirement in the process is that prospective adoptive parents complete a pre-placement assessment. This is often referred to as a “home study.” A home study is an in-depth interview and background check conducted by a child placement agency. This process and can take up until 6 weeks to complete. Many hoping to adopt will complete a home study before ever connecting with a birth mother. Others may wait until they connect with a birth mom to begin the home study process.

If the home study has been completed and reviewed by the time the child is born, the adoption statute allows the adoptive parents to take the baby home directly from the hospital. This is called a “temporary transfer of custody.” If the home study is not yet complete, the baby may be placed with a “privately-funded” foster care provider until the transfer of custody can take place. The temporary transfer of custody is referred to as an “at risk” placement because the parent or guardian who makes a temporary transfer of custody retains full parental rights (and can change their mind at any time) prior to the consent or termination. For a variety of reasons such consent and termination hearings, which must be conducted before a Judge or Referee, can take up to 3-4 weeks to arrange after the birth of the child.

Of course, if the birth father is unwilling to consent, or his whereabouts or identity is unknown, there are additional procedures that must be followed to safeguard the adoption plan and protect the rights of the father. The court will not allow the adoption plan to proceed until all such provisions have been followed.

In addition, after consents are given and terminations take place, the birth parents have a 21 day appeal period. Within that 21 day period, a judge may grant a re-hearing or may modify or set aside the order that terminated parental rights. However, the Michigan Court of Appeals has made it clear that simply a change of heart or a change of mind is not, in and of itself, sufficient to allow the parent to revoke his or her consent or release. Thereafter, the temporary transfer of custody becomes a “formal transfer of custody” which is supervised by the courts until the adoption is finalized. In a typical direct placement adoption, finalization can take up to 6 months.

Alternately, the direct placement of a Native American child is controlled by federal law, not state law. In such an adoption the federal Indian Child Welfare Act (ICWA) applies. The ICWA establishes different requirements for the adoption, such as a longer period in which the biological mother can revoke consent, a longer appeal period after consent and finalization occur, and the right of the tribal counsel to intervene, etc.

Birth Mother Expenses

The Michigan Adoption Code (the “Code”) allows the adoptive couple to assist the birth mother in what are considered to be reasonable and necessary housing expenses that enable her to get through the pregnancy. This assistance is allowable up to 6 weeks after the birth of the child. The Code allows the adoptive couple to pay the birth mother’s legal fees, and provide for medical expenses that are not covered by the birth mother’s Medicaid or private insurance carrier. In addition, the Code requires that the birth mother be offered counseling regarding the adoption plan, paid for by the adoptive parent. Please note, it is absolutely vital that no money change hands between the birth parents and the adoptive parents. Each itemized expense and receipt must be presented to the court and all monies can only be exchanged through the legal representative or adoption facilitator representing each party.

Birth Mother Expenses

A direct placement adoption can be as “closed” or as “open” as the parties all agree. Some parties may agree to exchange identifying information, such as last names, addresses, etc. However, others may chose to exchange first names only. The 1995 law expanded the information that is provided to prospective adoptive parents regarding the medical and social history of the biological families. Such information can include the circumstances that lead to the child’s conception, the health and genetic history of the child’s biological family, a social history including any history of abuse, substance abuse, neglect or other mistreatment of other family members and any information that may be necessary to determine the child’s eligibility for state sponsored medical or other benefits. Years ago, this kind of information was off limits to adoptive families. However, it is now thought that this information should be shared with prospective adoptive parents at the earliest possible opportunity in order to make an early diagnosis and provide treatment for serious medical and/or psychological conditions that an adoptive child may later develop. Another reason for this policy is to avoid disruptive adoptions that occur when families find that they cannot financially or emotionally cope with the adoptee’s serious medical and/or emotional needs.

Stepparent Adoptions

Typically, in a stepparent adoption, the child’s biological parents are divorced or the parents were never married but the birth father has acknowledged paternity, or has failed to acknowledge paternity formally but has established a custodial relationship with the child. When the custodial parent re-marries, the new spouse along with the custodial parent petitions to adopt the child. Ex-spouses or fathers that were never married to the birth mother can consent to the adoption by the stepparent or, where the father does not consent, the parental rights of the father can be involuntarily terminated. Michigan law states that “if having the ability to support, the parent has failed or neglected to provide regular and substantial support for the child or has failed to substantially comply with a court ordered support for a period of two years or more,” and “if a parent having the ability to visit has failed, or neglected to visit or communicate with the child for a period of two years or more,” the parental rights of such parent can be involuntarily terminated. A child over the age of 14 must give consent to the adoption.

Once the petition for adoption is filed, the court will investigate the best interests of the child. This report is usually made by an agent of the court, a child placing agency or the Family Independence Agency. The adoption process generally takes up to a year after the order terminating the parental rights of the biological parent occurs. However, the court can (and usually does) waive the 1-year period if it is in the best interest of the child.

Family/Relative Adoptions

In these cases, the biological parent consents to the adoption of their child by someone related to the child within the fifth degree by marriage, blood or adoption. Typically, these adoptions occur where a biological parent, who is a minor, wishes to have an older family member adopt the child. A disabled parent may wish to have another family member adopt his or her child; or, grandparents may adopt the child due to the inability of their child to care for the grandchild(ren). However, more and more family adoptions are occurring where the birth parent is in jeopardy of having the child(ren) removed by Child Protective Services for reasons of suspected neglect or abuse. Here, the parent would rather consent to an adoption by the family member of their choice than have the child(ren) go into the state-funded public foster care system. Of course, just as in a stepparent adoption, if the child to be adopted is over the age of 14 his or her consent for the adoption must be obtained.

Before the court can accept the consent of the biological parent, it must investigate the facts. The investigation can be done by the court, by a child-placing agency or by the Family Independence Agency and must be presented to the court within 3 months of the order to investigate. The court must also consider whether the adoption is in the best interest of the child. If one biological parent consents to the adoption of the child by a family member and the other biological parent does not, a hearing must be held to determine the rights of the non-consenting biological parent. If the court determines that the non-consenting parent has shown no interest in the child, or was given proper notice of the hearing and fails to appear, their parental rights may be terminated.

Generally, the order for such adoptions are entered about a year after the order terminating parental rights occurs. The court can (and again, usually does) waive the one year period if it is found to be in the best interest of the child.

Declarations of Parentage

Surrogacy agreements are void and unenforceable in the state of Michigan pursuant to the Surrogacy Parenting Act. This law prohibits contracts and payments to surrogates for carrying to term the child of another. However, where no contract and/or payment is involved, no law prohibits a woman in Michigan from being implanted with the fertilized egg of another woman. In situations where a surrogate carries to term the ovum of another woman, or a donor ovum fertilized by the sperm of a man that is not her husband, the court may declare the biological parent to be the “legal parent.” Such provisions have enabled many couples (or singles) to have a sister, cousin or close friend carry the fertilized egg to term.

Technology has made a number of scenarios possible. If the ovum of the wife is fertilized with the sperm of the husband and is carried by a surrogate to term, the couple would file a Declaration of Parentage whereby the court declares them both to be the legal parents. However, if the ovum is donated by an anonymous donor and fertilized by the husband, the couple would file a Declaration of Paternity to name the husband the legal father. This enables the husband to obtain custody at birth, and the wife would later file a stepparent adoption to become the legal mother. On the other hand, if the ovum is that of the wife and is fertilized with donor sperm, the couple will file a Declaration of Maternity to declare the wife the legal mother. This enables the wife to obtain custody at birth and the husband would later file for a stepparent adoption to become the legal father. In any event, a court order will be required to declare the biological parent the legal parent.

In order to obtain a Declaration of Parentage, Paternity or Maternity, the biological parent or parents must file a declaratory action in the Circuit Court of the county in which they reside. Once obtained, the court order declaring parentage directs the Bureau of Vital Statistics to list the parents accordingly.

Please be advised that, because a Declaration of Parentage is technically a lawsuit (albeit amiable), all parties should be represented by counsel. You should also be aware that the pleadings filed in this case, as in most civil actions, are a matter of public record.

Adoption Costs & Credits

There are various costs involved in adoptions, from legal fees and birth mother expenses in a direct placement adoption, to filing fees for petitions in family/relative adoptions. However, due to tax relief legislation, some of these costs can be used to reduce your taxable income, or as a dollar-for-dollar tax credit to your overall tax bill. In 1996, the Small Business Job Protection Act (SBJPA) was developed to promote adoptions in the United States by offering a tax credit to defray the cost of customary adoption expenses. The program was so successful, that on June 7, 2001, the President signed a bill that modified and increased the tax credit for many U.S. adoptions. Where the 1996 program originally allowed for a $5,000 tax credit and up to $6,000 for special needs children, the newer bill allows a $10,000 credit for all “qualified adoptions” beginning in 2003. Furthermore, under the 1996 statute, those individuals with incomes over $75,000 began to see a phase out of the credit, and the credit was completely unavailable to incomes over $115,000. Under the newer law, the phase out now begins at $150,000 and runs through incomes of $190,000. Thus, more income levels are now eligible to benefit from this tax credit.

Adoptions that “qualify” for the tax credit are successful or unsuccessful (i.e., not completed) adoptions of a special needs child or of a U.S. citizen, and only the successful adoption of a child that is not a U.S. citizen. In addition, the child cannot be a biological child of either taxpayer.

The current credit of $10,000 for such adoptions is scheduled to expire at the end of 2010. Consequently, Congress introduced HR1057, known as the Adoption Tax Relief Grantee Act on March 4, 2003, in an effort to make the adoption tax relief permanent. HR1057 is currently before the House Ways and Means Committee.

For anyone desiring to start or expand his or her family, some form of adoption may be the best choice. If done for the right reasons, adoption can be a joyous undertaking, but if done too hastily or for the wrong reasons — adoption is not easily undone. Remember, you cannot sever legal ties to a child in the way that you can sever legal ties to a spouse. In many instances, adoption counseling is advisable for the birth parent(s), adoptive parent(s) and the adoptee in order to promote a successful outcome.

If you think some form of adoption may be right for you, or for more detail regarding the adoption process, please contact Ms. Nance at 248.740.5686 or click here to send an email.

Be advised that the information provided herein relative to the adoption tax credit has been provided for educational purposes only. For specific tax questions seek the advice of a tax attorney or other tax professional.