Legal Misinformation
Halt | May 21, 2022 | 0 Comments

Are You Falling for Legal Misinformation?

Do you ever wonder about some of the legal information you read about on the internet or hear from friends? There’s a good chance that at least some of it are inaccurate, categorizable as misinformation by modern standards. What are some of the most common myths that pervade the public media, chatrooms, blogs, and discussion forums? Perhaps the biggest whopper of them all is that attorney fees are astronomically high.

Other gigantic legal misinformation, misconceptions, and half-truths are related to the cash value of term insurance policies, how retirement fund withdrawals are taxed, real estate, gold, and how social security payments are reported on tax returns. Of course, there are more, but those seem to be the most common legal misinformation currently making the rounds. Here are the formal versions you’re likely to hear, along with the correct version of each.

Common Legal Misinformation

Attorney Fees Are Prohibitively High

Legal Fees

There’s competition among lawyers, both independent and those who work for large firms. In the past few decades, legal fees have come down from a once-high level. The danger of assuming that fees are extremely high is that people resort to defending themselves, without professional assistance, in traffic, personal injury, and even criminal cases. The result? They invariably lose their cases when they serve as their own legal representatives.

You Can’t Sell Your Term Life Insurance Policy

Sell A Life Insurance Policy For Cash

The reality is not only can you sell a term policy, but the move can be a very smart financial move depending upon your situation. For starters, more people carry term coverage than any other kind of insurance, even universal, variable, whole life, or guaranteed issue policies. As the name implies, term only lasts for a specified time. Unfortunately, many adults who are covered by term insurance let the contracts lapse when the time runs out and never give a thought to selling them for cash before their expiration date. In many cases, those very same people who let coverage lapse could have obtained cash via life or viatical settlements from a third-party buyer, if only they had known what to do.

All Retirement Fund Withdrawals Are Tax-Free

Taxable Income

Taxation status depends on each person’s financial situation, and many withdrawals are fully taxable as income, even if it’s at a reduced rate because you are retired and in a lower income bracket. There’s only one way to know for sure what you’ll pay in taxes before making a withdrawal: check with a CPA, tax attorney, or certified financial planner.

It’s Illegal To Put Real Estate And Gold Into IRAs

If you set up a self-directed IRA (SDIRA), you can put real estate, precious metals of all types, and even cryptocurrency into it. Always check with a financial pro before funding a SDIRA because there are additional forms to get the account started. After that, it’s your choice what to place into it, as long as the assets meet the specific legal requirements. As for social security income, the IRS uses a formula to determine how much of it is taxable, based on each person’s other income and several additional factors. In many cases, retirees pay tax on their social security benefits.

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