It is possible to account for active loans or lines of credit on an Estate, Trust, or POA. The steps below will allow for:
The liability to appear as a date of death/original/funding asset on appropriate forms.
Payments toward the liability will be trackable on the accounting.
The balance remaining on the liability will be updated by the payments.
Step 1: Adding the Liability
Step 1: Adding the Liability
The first step in accounting for an active loan or line of credit is to add it as a liability in the software. To do this, follow these steps:
Click "Inventory" in the left-hand side menu.
Click the "Add new" button in the top-right corner.
Select the "Inventory Type" Liability.
Select the category that best represents the liability under "Liability Type."
Upon selecting a liability in the dropdown, additional fields will populate. Enter liability details to the fields, ensuring that all mandatory inputs (starred fields) have input.
For a Trust: indicate that you are adding a Funding Liability.
For Estates and POAs: ensure you've added a Date of Death or Starting Value respectively.Once you've entered all the liability information, scroll to the top of the screen. You can hit "Save" to return to the main inventory screen.
Step 2: Adding the Account
Step 2: Adding the Account
The next step is to add an account that will represent the loan or line of credit.
Click "Inventory" in the left-hand side menu.
Click the "Add new" button in the top-right corner.
Ensure the "Inventory Type" selected is "Asset".
Select the category that best represents the asset under "Asset Type." You can select any one of the following account types:
Estate Bank Account (Estates)
Additional Estate Account (Estates)
Trust Bank Account (Trusts)
Trust Investment Account (Trusts)
Additional POA account (POAs)
Upon selecting an asset in the dropdown, additional fields will populate. Enter asset details to the fields, ensuring that all mandatory inputs (starred fields) have input.
Once you've entered all the asset information, scroll to the top of the screen. You can hit "Save" to return to the main inventory screen.
Step 3: Reflecting the Value of the Liability in the Account
Step 3: Reflecting the Value of the Liability in the Account
The final step is to reflect the value of the liability and the account that was created. To do this, follow these steps:
Click "Inventory" in the left-hand side menu, and select the Liabilities tab.
Click on the line item for the Liability. Then, select the "Pay" button.
Ensure the payment is linked to the account created in Step 2, and that the description reflects that this is the starting balance. Complete the fields and hit "Save".
Once these steps are completed, the software will reflect the loan or line of credit as an account with a negative balance (reflecting the liability's value).
Transactions can then be added to the account to track payments and keep an ongoing balance.