What happens if given money then parent dies?

So there's more to the question than stated above.
What would happen if my father took out £10,000 and gave it to me as cash to do as i liked with and then he died a month or so later. The twist is my father didn't actually have this money to give and dies £10,000 in debt?

I know debt collection rarely

So there's more to the question than stated above.
What would happen if my father took out £10,000 and gave it to me as cash to do as i liked with and then he died a month or so later. The twist is my father didn't actually have this money to give and dies £10,000 in debt?

I know debt collection rarely goes onto family as it was not their debt to settle but i'm wondering how this would work out.

(This is a purely hypothetical situation)
If he was broke, had liquidated everything he had and paid that to family members prior to death and then took out loans and gave that money away too?
What are the chances i would have to pay it back after he died in debt?

Other answer:

It sounds like a loan but, more like fraud because he cannot pay what he does not have. If he somehow managed it and his bank account was in the whole then, no, it would not be your debt but the debt would have to be paid by the Executor/Personal Representative handling the disposition of the decedent's Will. If he/she does not, he will likely be sued. All debts of the deceased must be paid off before any money/assets are distributed to the heirs.
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Enough Trolls:
He dies broke – so has no money and so the estate is NOT liable to inheritance tax (IHT).
In theory you declare the £10000 as income (gifts are taxable).

The estate of the father is wound up – the debtors lose because there is no money. You are not responsible for the estate of the deceased.

He gave it to you so it's yours. He must have borrowed it and it's the responsibility of his estate to pay it back to wherever he borrowed it from. The executor(s) would have to sell anything else he owned in order to pay the debt, but if there isn't enough in the estate, the creditor just has to suck on air for the rest. And there will be nothing for anyone to inherit.

It's the same as if you went bankrupt – everything you own has to go to pay back your debts as far as possible, but if that isn't enough, that's the end of it and the creditors just have to write off what they didn't get. Nobody else can be made to pay YOUR debts.

You asked Tavy why more people don't do this. Because we don't know when we're going to die, that's why. How many of us know we're going to die next week or next month? Of course you don't know – and until then, you still need money to live on, and you will want some savings for emergencies. Run up debts and sooner or later, whoever you owe will be after you. Probably you'll end up bankrupt and that's not much fun. Your money ends up being controlled by an administrator for 5 years, they pay you an allowance to live on out of what you have coming in, and anything else you receive in that time will be taken to pay back more of the debt. Nobody can pay you – they have to pay the administrator.

To give an example of how real people think, there is the topic of inheritance tax planning. You can plan to avoid inheritance tax by giving your money away before you die, but that would be silly if you don't have enough left for yourself. My Mum has thought about it because I talked to her about it, and she has enough in savings for it to be relevant – Dad died before he was old enough to retire so she's got what he was saving up for retirement as well as what she's saved.

So what she has plus the value of her flat (she owns it leasehold) goes over the IHT threshold. Anything she gives to me and my sister now will save 40% IHT on it later. Of course HMRC have thought of that too and that's why the Inheritance Tax Act says you don't save the tax unless you live for another 7 years. Otherwise everyone would just give everything away on their deathbed. (The rate of tax goes down after 4 years but it doesn't go completely until after 7.) And I don't want her to give everything away in case she might need it later.

LOL IHT planning is rather a black art – if there were such a thing as a functioning crystal ball, Mum could know if she will still be here in 7 years' time! Not that it matters – it can't create tax, only save it if she lives long enough. So she can't lose, only break even or win. More importantly, how much should she give away and how much should she keep? Nobody can decide that for her.

And if you're thinking of "why doesn't she give away her flat by just putting it in my name?", HMRC are ahead of you yet again. If you give away your house but still live in it, the Act says "gift with reservation" and it counts as if you didn't give it away at all. The only way to make this work is to pay rent for the house at a commercial market rate to whoever you gave it to.

Posh Dosh:
A lot depends on where he gets the money from. If he borrowed it from a bank and the bank can prove he gave it to you, a court could order you to pay it back.
Brian Wesley:
Since he didn't "have" 10,000 to give, he must have taken out a loan. The loan must be paid off by the estate before any inheritances can be paid out. The lessee can and will take anything of value until they receive the amount due to them: automobiles, real estate, jewelry, collections, anything. All debts in the deceased's name must be satisfied before the heirs get theirs.
Generally you don't get a 10k loan, without 10k of collateral. So the bank takes the collateral. If he didn't have collateral, he didn't get the loan.
The agency would not be allowed to track who he gave the money to. So it would be lost revenue to them if he leaves no money.
If he just handed you the cash, you would be in the clear. His creditor would have to go after his estate to get paid.
generally you don't get a 10k loan, without 10k of collateral… so the bank takes the collateral… if he didn't have collateral, he didn't get the loan…

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