No Value: Cape Ann Savings Bank, As Personal Representative Of The Estate Of Karin Gale vs. Cunningham, Iii, John D. et al

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                                Date Filed 6/7/2024 2:54 PM
Superior Court - Essex
Docket Number




                                                         horvitz&ctrischpe
                                                          CERTIFIED PUBLIC ACCOUNTAN1 LLP.

                                                                                   wit       ~


                                                                                                                        RECEIVED
                        Karin S. Gale
                        Four Cambridge Avenue
                        Gloucester, MA 01930

                                                                                                      May 18, 2021

                        Dear Kari

                        It was a pleasure to talk with you last week. J am very sorry to learn of your serious medical issues
                        and will try to be of assistance. You have asked for my advice relating to the portion of the IRA
                        left to you by your late husband, Justin E. Gale (Jud”). You have shared with me the relevant
                        portion of your ante-nuptial agreement and told me about your difficulties with Morgan Stanley in
                        dealing with your [RA.

                        {explained to you that I am both a CPA and                   a Certified Financial Planner (CFP). You have told
                        me that you and Jud had planned to pay                     off the mortgage on the Cambridge Avenue home
                        (approximately $315,000) and the car loan                   (approximately $10,000), which you have recently
                        done, from the approximately $900,000 sent                 to your Bank of America account by Morgan Stanley.
                        You have also told me that with your worsening health that you presently have medical/home care
                        expenses of approximately $3,500 per month, which you expect will increase as you are able to do
                        less for yourself Additionally, you have the continuing and increasing expenses for the house
                        which are approximately $37,000 per year.

                        1 am sure that your late husband wanted you to be cared for and provided a share of his IRA for
                        your benefit.   However,    with his death,        the income available to you is very much diminished,

                        One of the consequences of taking money out of an IRA is that income taxes need to be paid both
                        to the Federal and State governments. These income taxes are going to be due whenever the funds
                        are withdrawn, now or later. You have already used part of your [RA inheritance to pay off the
                        loans and you will continue to need money for your ongoing health care needs and expenses.                 Your
                        tax preparer has calculated that income taxes of approximately $244,000 (Federal) and $40,000
                        (State) will be due and advised making estimated payments.

                        The ante-nuptial agreement had a provision that called for naming Jud’s four children as
                        beneficiaries of any remaining funds in the IRA at your death. As the owner of the [RA, you have
                        the right to withdraw all of the funds and use them for whatever purposes you choose, provided
                        you pay the income taxes on the distributions

                        Even though your medical prognosis is not good, no one knows how much care you will need or
                        its cost.



                                                         28 Mair Street,    Glowcest     M       husetts 1930.
                                                   fel 978 2B} 2639        ac OF                 cpavhorvi       cont
Date Filed 6/7/2024 2:54 PM
Superior Court - Essex
Docket Number




                         Page 2 of 2
                         Karin 8. Gale
                         May 18, 2021




                         { have looked at the materials forwarded to you about late contributions and rollovers.   You have
                         told me that you are concerned to avoid involvement with the IRS on this issue.

                        My advice is to not initiate the late contribution process, particularly since you have already used
                        these funds for the loan payoffs, and you will need to pay the income taxes due on the distribution.
                        Most importantly, you need to have the remaining funds available for your current and future care
                        needs, [am hopeful this advice is helpful, and 1 wish you all the best.

                                                                              Very truly yours,

                                                                              HORVITZ & FRISCH, P.C.


                                                                          —toued                      Daceh
                                                                              Howard M. Frisch
                                                                              Certified Public Accountant,
                                                                              Certified Financial Planner


                        AME/mr

                        ce: Attorney John Cunningham