So what you would need to do first--when I say "you" I mean anyone considering an arrangement like this, starting with Coloradobaby--is check whether it is possible for your husband to adopt his niece/nephew (i.e., your intended baby) without needing a home study. All states require home studies for adoption, but in a lot of states that requirement is waived or made easier (like the home study process is simpler) if the adoptive parents are family members of the birth mother/baby.
So get those details checked out, so that if it turns out you need some sort of home study or state approval to be adoptive parents, you can get that done before the baby is born.
That's the website of the American Academy of Adoption Attorneys, which is the professional organization that adoption lawyers belong to.
And do have a contract, but keep two things in mind:
- If your husband's sister is married, have her husband sign too. The reason for that is that in most or perhaps all states, there's a legal presumption that the child of a married woman is her husband's child. That presumption is a relic of olden days before there was DNA testing, but it's still the law, and as a result you sometimes see men forced to pay child support for kids that aren't theirs, because the kids were born during the marriage (i.e. the wife cheated). I mean literally, with DNA tests proving it's not theirs, they still have to pay support because the law is the law. I mention this because if Colorado has this legal presumption, then your sister's husband will be presumed to be the kid's dad, which means that if he decides to object to the adoption or otherwise make trouble, you could be in a very tricky spot.
- You can't actually enforce a traditional surrogacy contract. If the surrogate mother is the genetic mother too, then that is her baby until she gives it up, and no court in this country is going to force her to give up her baby against her will. So, the point of having a contract isn't because you're going to be able to force her to give up the baby. You're not. The states that enforce surrogacy contracts only enforce nontraditional surrogacy contracts (i.e. where the egg is from a donor or from the intended mother, not from the surrogate). The point is... well, there are two points: (1) writing up a contract is the best way of making sure you guys cover all the bases and get absolutely clear on what it is you're all agreeing to; and (2) not to be morbid but if your sister-in-law dies before the adoption paperwork is where it needs to be (i.e. before her parental rights are terminated), having a contract could be a big help in making sure the adoption goes smoothly.
Best of luck to you all!