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Welcome to AgFed Credit Union's MoneyDig blog!
Get confident about your personal finances with a number of articles, tips, advice and more.
## Unmerging Shared Finances Following a Breakup
 Oct 30, 2024
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Going through a divorce, separation, or breakup with a long-term partner can be a challenging experience. On top of the personal and emotional factors you’re already experiencing, you must deal with the impacts on the financial life you once shared and split that up.
Unmerging finances post-breakup may seem like a tremendous headache, but we’re here to help ease some of that burden. Follow our guide to successfully split your formerly shared finances and create a path toward financial independence.
**Have the Hard Conversations**
The first and most crucial step in separating your previously joint finances is having direct and honest conversations with your former partner, no matter how difficult. Even though tensions might be high in the wake of a breakup, it’s crucial to discuss money calmly and rationally to ensure a stable transition from joint to individual financial management.
Setting clear expectations upfront ensures mutual understanding and helps avoid conflict in the future. Consider involving a neutral third party, like a financial advisor or mediator, to assist you through these conversations if necessary.
**Discuss Debts & Review Assets**
Dividing assets is one of the most fundamental steps in unmerging your finances. If you’re going through a formal divorce, many of these steps will be handled by court order. However, if you’re ending a long-term relationship outside of marriage, it’s important to take this step seriously to avoid future conflict.
Start by making a comprehensive list of everything you have between the two of you, including all debts, assets, and other accounts & possessions. Make sure you include:
* **Debts**: Credit cards, student loans, medical bills, mortgages, car loans, etc.
* **Assets**: Anything you own, including vehicles, homes, and properties, as well as accounts, including checking, savings, investments, and retirement accounts.
* **Possessions**: Valuables like jewelry, art, and collectibles, as well as furniture and household items.
Once you’ve added everything to the list, it’s time to decide who handles and gets what. Document all agreements in writing so you can avoid any potential disputes down the line.
Typically, whoever owns something or whoever’s name is on the loan or account will retain ownership, but there are exceptions in certain instances and rules that vary by state. For shared assets, you’ll need to determine how those will be split.
For debts, decide how those will be handled moving forward. Will one of you be assuming payments, or will you both continue payments until the debt is fully paid off? Outline a clear plan for payments or refinances and who is responsible for which portion of the debt. Consider closing joint credit accounts to prevent future financial entanglement.
**Build Your Own Budget**
Now that you both have a clear understanding of your new financial situation, it’s time to create a budget that reflects your now separate finances. This new budget should be based on your individual income, any debts or payments you are assuming, your monthly living expenses, and your unique savings goals. Having a budget all your own allows you to adjust to life on a single income and take the reins on your finances.
**Check Your Credit**
Splitting finances can significantly impact credit, especially if one partner has a better history. If your partner has the better credit score between you two, work to get yours in optimal shape. Improving your credit will help you qualify for loans with better terms and interest rates when you’re on your own.
If you need some help getting your credit in better shape, follow these tips:
* Pay your bills on time, every time.
* Reduce your debt-to-income ratio by paying down outstanding balances.
* Keep credit card balances low.
* Avoid opening multiple new credit accounts at once.
**TIP:** Adjusting to a new, single income can be challenging. If you believe you will not be able to make a loan payment or bill on time, do not skip the payment. Instead, contact your financial institution or vendor **before** the payment is due. They can often help work out a payment plan that will not impact your credit score.
**Evaluate Your Insurance**
Don’t forget to review and update your various insurance policies in the wake of your breakup. Make sure you look at:
* **Home & Auto Insurance:** Decide who will maintain which policies and who will take over payments. Update your coverage to reflect your new living arrangements if you are relocating.
* **Life Insurance:** Determine if you need to transfer any existing policies or update beneficiaries. Ensure all policies align with your new financial situation and future needs.
**Tackle the Taxes**
Divorce can bring significant changes to your taxes. You may need to change your filing status, adjust withholdings on your paycheck, or adjust your payments. The division of assets and any potential alimony or child support payments will also affect your taxes. Consider working with a tax professional, especially in your first year of single life, to help you understand the tax implications of these major life changes and guide you to avoid any issues or surprises.
**Arrange Alimony & Child Support Payments**
If you and your ex-partner have children in the picture, you may need to arrange child support. Depending on the terms of your divorce agreement, alimony payments may also come into play. Both payments can substantially affect your finances, adding additional expenses to your budget. Make sure you understand the legal requirements for each payment.
**Keep Consistent Records**
Managing your finances solo can be difficult. You’re going through multiple changes at once and taking on new aspects of your finances, some of which you may not have managed before. Maintaining detailed records of all agreements, documents, and changes to your financial accounts is crucial. This step will help you stay organized and remain on top of all your financial obligations.
Any agreements with your ex-partner should be made in writing and stored in a safe location. You should also keep detailed records of any payments on shared assets or for child support and alimony.
**Open Your Own Accounts**
One of the final steps of unmerging your finances is opening your individual accounts. If you have joint accounts with your ex-partner, it’s time to close them. Make sure to stop any automatic payments being drawn from your old joint accounts.
Then, open separate checking and savings accounts to manage your money on your own. Your new individual accounts will allow you to establish economic independence and make managing your money much easier.
**We’re Here to Help!**
Unmerging finances after a divorce or breakup can be a complex process. Fortunately, with careful planning and clear communication, it is possible to navigate this transition smoothly. By taking control of your financial future, you can set yourself up for success in this new chapter of your life.
We are here to support you with the financial tools and resources you need to succeed. If you want to open new accounts, we’re happy to assist you. Please  today.
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## The Retirement Primer: Things to Know About Trust Funds
 Oct 28, 2024
While most people think about wills when they think about estate planning, a will is only one part of establishing a plan for your estate.
A will is a contract between you and your heirs that is enforced by the state. It does the job, but it’s far from perfect. First, the will has to go through a process called probate, which is a hearing in front of a probate judge. Second, there are expensive attorneys to hire, and administrative costs can easily eat 2-4% of your assets before your intended heirs even see a penny. Wills can also be challenged in court and thrown out on “testamentary capacity.”
Another way to plan for your estate is by establishing a trust. This alternative to a will can be a great choice for people who want more access and flexibility with their estate planning.
Here are five things to know about trust funds.
1. **A trust fund is a private contract that is always accessible to the holder**
The process of probate turns wills into public documents. They’re a matter of record that anyone can look into. In some states, certain parties are even entitled to copies of a will.
A trust, on the other hand, is a private document that never sees a courtroom. No one, other than the trustee and the designees, can see a copy of the trust contract. This can help to prevent quibbling over who got what down the line.
Trust funds also offer accessibility. The assets placed in a trust can be accessed according to the terms set by the grantor, whether that’s immediately, at a certain age, or under specific conditions. This flexibility ensures that beneficiaries receive support when they need it, without the delays often associated with probate.
1. **Your designated trustee is responsible for executing your wishes upon your passing**
When you establish a trust, you appoint a trustee to manage and distribute the assets according to your wishes. This person or institution is legally obligated to follow the instructions outlined in the trust agreement. Upon your passing, the trustee steps in to ensure that your assets are distributed to your beneficiaries as you intended.
This can provide peace of mind, knowing that your loved ones will be taken care of in the way you envisioned. Unlike an executor of a will, who may need to navigate the probate process, a trustee can often begin administering the trust immediately, ensuring a smoother and faster transition of assets.
1. **Trust funds can lower taxes**
Life insurance benefits are usually included in your estate. This payment can push an estate over the threshold for federal income tax.
Irrevocable trust funds, on the other hand, can help reduce or eliminate estate taxes owed after the trust fund holder dies.
Trust accounts can also spread the capital gains from an estate among several parties, thus lowering the amount of total taxes paid on the proceeds of the sale of a house or other significant assets.
1. **Trust funds allow for greater control**
A trust fund offers greater flexibility and control compared to a will. While a will simply dictates who receives your assets after you pass away, a trust allows you to set specific terms and conditions for how and when those assets are distributed. For example, you can create a trust that provides for your children’s education, with funds distributed directly to educational institutions, or you can set up a trust that gives beneficiaries a monthly stipend, rather than a lump sum. You can also stipulate that a beneficiary receives their funds upon reaching a specific milestone, such as graduating from college. This allows you to continue being a part of your family for years into the future.
5.**Trust funds do not require an attorney or witness**
While it’s always advisable to consult with a legal professional when setting up a trust fund, it’s not a legal requirement to have an attorney or witnesses present. Trusts can be established by simply creating a trust agreement, which outlines the terms and conditions of the trust, and transferring assets into the trust.
This process can be more straightforward and cost-effective than creating a will, which typically requires formal execution, including signatures from witnesses and, in some cases, notarization.
A trust fund can be the perfect way to ensure your assets are distributed the way you’d like them to be after you pass on. Use this guide to determine if a trust fund can be the right choice for you.
Did you know that AgFed has partnered with Trust & Will to bring you a discount on trust and will products? Learn more about this partnership and how AgFed members can save 20%.\*
\* Trust & Will is a nonbanking service offered by a third party, not AgFed Credit Union. AgFed is not responsible for the service. This is not to be considered a referral for legal services or an attempt by AgFed Credit Union to endorse or guarantee legal services provided by any individual or firm. Trust & Will is offering 20% off the initial purchase of an estate plan. No promo code is required; the discount is automatically applied at checkout to the initial purchase of a Will or Trust-based estate plan. Subsequent upgrades aren’t eligible for a discount.