Hello there,
With apologies if this has already been answered.
If i was in a lucky enough position to have parents who had an estate valued in the region of £2m and they liquidated some of their assets and gave me a large lump sum of cash (say in the region of £600k), my parents other assets would total in the region of £1.4m. I also understand that, as long as they were to survive 7 years, that 600k would fall out of their estate for IHT calculations.
Now let's say on the day i received the cash gift, i took it and invested it all by purchasing shares of some stock. Let's then say my parents then both passed away 2 years after the gift. Now the original sum was £600k but the value of the stock had (rather incredibly) gone up by, let's say, 50% meaning that the total amount in my share dealing account would then be £900k. Would any IHT liability rest on the original gift or would it include any profit gained on it in the meantime? Would i be allowed to liquidate the shares and use any profit to pay for IHT? Obviously CGT would be liable on any profit on sale of the shares but i'm specifically asking here about the IHT factors.
I hope that all makes sense. For a less 'sexy' example i could have just said i put the lump sum into a bank account paying 1% interest per year and still been in a similar situation wrt profit earned on lump sum gifts and IHT!
Thanks for any help anyone can give.
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