thewealthworks Customer Support Portal

Overview

Properties are often the asset with the greatest value in an estate and inevitably there is often a change in their value during an estate’s administration.  How do you manage those changes in Troika? The details of how to post a number of scenarios follow.

Date of Death

A property would be entered into Troika into the IHT405.  In the following example the property is the deceased’s main residence, but the principle is the same for other properties, and could also be applied to farms too.

From Estate Details – Edit, within the Inheritance Tax Account tab, select the IHT405.

Within Load Data, select the IHT405 in the Assets/Liabs selection and add the details of the property in the transaction.

This is what an entry for a main residence looks like in Load Data once posted:

This is what the accounting transaction looks like:

Pre Grant

If you receive an alternative valuation (for example the District Valuer challenges the valuation) you may need to increase (or decrease) the value of the property.  What you enter into Troika will depend on when the new valuation is received.

If you received the valuation before the grant has been finalised, you would amend the original entry.

Double click the figure displayed in the Load Data screen.  This will open up the accounting transaction which will also update the figure that is also displayed on the IHT form once you regenerate it.

Amend the Main Amount.  In this example we have increased the value to £800,000:

NB  We have left the Estimate tick in place, but you may wish to remove it at this point, if appropriate.

Post Grant

Once the application has been made and the Grant received, you must make sure that you record the date of the Grant in Troika.  You will need to record this even if you are not making the Grant application and merely preparing accounting records for an estate as this is required to record post death adjustments.  This will freeze the IHT entries and the system will record the changes which affect the value of the estate for IHT purposes as correctives.

From Estates Details – Edit enter the date of the Grant of Probate.  A Schedule of Correctives button will appear:

The Load Data screen will look like this, with Additions replacing the IHT Details button:

Posting a New Valuation

Post grant, a change in valuation would be posted as a corrective.  The only exception would be if the property had not been included on the IHT form at all, in which case click on the Additions button in Load Data and process the property as if adding to the IHT form (see Date of Death).

In Load Data double click the value of the item to be changed.  This will open the Edit Transaction screen.

To decrease the value of the property by £2,000 enter -2,000.00 as shown and click Update to save the amendment:

The system will then display the adjusted amounts, showing the accounting entries and ask you to confirm as shown:

To increase the value of the property by £2,000 enter 2,000.00 as shown and click Update.  The system will then display the adjusted amounts, showing the accounting entries and ask you to confirm as shown:

You will then be asked to confirm that you want to update the balance itself.  Click ‘Yes’ once you are happy the posting is correct.

The Load Data screen will now display like this:

The accounting records are displayed like this on the Trial Balance:

If you review the nominal details the corrective is shown as a separate transaction like this:

Selling the Property and Recording Net Proceeds

To process the net proceeds of a property sale in Load Data, move to the administration period using the Period drop down list, or by using the forward arrow next to the list, then click on the Administer button.

Select the Assets button then Sell from the Transaction Type drop down list.

Select the Asset from the drop down list.  The book value will be displayed in blue to the right of the asset once it has been selected.

Select the bank that you want the money to be transferred to (a total of monies held in the account will display in blue to the left of the bank account).

The Description will populate with “Sale – Deceased’s main residence” this is what will appear as a default on the accounts, but you can amend this if required.

Enter the net proceeds that are to be received in the bank and click Add.

You will be asked to confirm you want to post the transaction.  Click ‘Yes’ to post the transaction.

The Load Data screen will now display the property, but the value will be zero, as it has now been sold:

The Trial Balance is updated to show that the deceased’s residence has been sold, together with a profit/loss on the sale itself.

At this point in time this is a couple of extracts of what the accounts would look like:

Selling the Property and Recording Gross Proceed and Sale Costs

Troika will also record the gross proceeds and sale costs if required.  The principle here is to create a bank account ‘suspense’ account.  This principle can be used for other purposes but these instructions will be limited to the sale of a property.  You can either post the sale first and then the costs or vice versa.  In this example we are posting costs first, and then the sale.

In Load Data move to the administration period using the forward arrow or the drop down Period list then click on the Administer button.

Begin by checking that you have a suspense account.  This will depend on what accounts are automatically created whenever you add a new estate, but in this example we have added an account called Miscellaneous Postings to act as our suspense account.

Select the Bank Accounts button, then ‘Other bank accounts – receipts’ from the Transaction Type drop down list.  Select Miscellaneous Postings if it is there, or create an account of your own by clicking on the green pile of bank note and adding the name of the account.

Select the Assets button, then Costs from the Transaction Type drop down list:

Select the asset, the book value will be displayed in blue to the right of the asset description.  Then select the ‘suspense’ bank account and then your cost.  The first we are posting are estate agent’s fees.  The description will default to ‘Expense’ followed by the name of the asset.  If you want to overwrite the description tick the tick box and you can type in a more specific entry (such as the name of the estate agent).

Click Add, and then confirm you want to save the posting.        

Next we are going to add an Energy Performance certificate.  Although this was arranged by the agent the estate is settling the fees directly.  Using the same selections as before choose an Expense nominal form the drop down list to match what you are posting.  In this instance we chose ‘Other property outgoings prior to sale’.  There are two nominals with this description, one for multiple entries that will then be grouped as a total on the accounts, the other for a specific description to be listed separately.  In this example we selected the second entry.

By ticking the Overwrite Description box you can enter a description which will carry directly through to the accounts. The description of the nominal is then displayed in the list of expenses as shown.

Click Add and then accept the transactions as before.

Lastly, we are going to add in some conveyancing fees using the remaining property outgoings nominal, but this time we will not overwrite the nominal description.

Enter the transactions as before, click Add and accept the postings.

The trial balance looks like this:

The next step is to sell the property:

From the Administration period in Load Data select the Assets button and the Sell from the Transaction Type drop down list.

Select the asset from the Asset list and the bank that you have used as the suspense account (Miscellaneous Postings).  Enter the gross amount received, click Add, and confirm the posting.

The Load Data screen is updated so that the value of the asset is zero, as it has now been disposed of.

The trial balance now looks like this:

You now have a complete ‘picture’ of the property.  If you click on the nominal detail of the Miscellaneous Posting you will see all the income and expense for the property.

The last step is to transfer the balance to the Client account.

In Load Data, in the Administer period, select the Bank Accounts button, then select ‘Transfers between bank accounts’ from the Transaction Type drop down list.

The trial balance for the date of death period looks like this:

If you select the administration period, the details of the property costs and final sale can be reviewed.  The aim should always be for the Miscellaneous Postings account to be zero at the end of the administration period.

The accounts at the date of death are the same, but the capital account now looks like this:

This article is confirmed to be applicable from Troika release 2.08.023.