I am 67 and my wife is 70. On the advice of our insurance agent and financial planner, an old family friend, I own several policies of insurance on my life with face values totaling $700,000. My estate is the beneficiary.

I have been having some health problems of late and read somewhere that I shouldn't own these policies. While I don't want to go to a lawyer and spend all that money, I am beginning to have second thoughts and want to make sure that my wife and children receive the maximum benefit from my lifetime efforts. At the same time, I don't want to lose a friend.

Can you give me some advice?

Yes. Because you may have received bad advice from your longtime friend and financial adviser, pay a lawyer now and get comprehensive advice after you disclose all of your assets - or take the risk that your widow will pay lawyers and Uncle Sam much more later on.

First, even though your wife is older than you by three years, statistically, she will outlive you by several years. Second, if you leave your insurance to your estate, when you die the policy proceeds will become part of your estate and, depending on how your will is worded, may not pass to your spouse estate-tax free, depending on your other assets. Third, some folks who don't believe they have taxable estates find - often too late - that life insurance owned by them can create a taxable estate. Depending on the value of your other assets and the way in which your will is worded, your assets may be subject to estate taxes that can consume upwards of 45 percent of your estate if it exceeds $2 million this year. We're sure this is not what you intended.

If you had received appropriate advice to begin with, you might have considered establishing an irrevocable insurance trust that would have owned and would have been the beneficiary of your insurance policies. You could have chosen a trustee - a relative, friend, bank, etc. - who would have paid the premiums with money you or your wife gifted to the trust. At your death, the policy proceeds would have passed free of estate taxes into the trust. Then, based on the terms of the trust, the principal or interest could have been paid to your ultimate beneficiaries - your wife, children, or others.

Your problem today is that if you transfer your policies into the trust, the proceeds will still be included in your estate if you die within three years from the date of the transfer. If your health is not good, this may not be a viable alternative, and you may want to make a gift of the policies to your wife who will then face the burden of planning.

Our advice: Seek competent legal assistance now. Whatever you do, don't rely on an insurance salesman for legal and tax advice. That's not to say that some agents are not trained in these areas. It is to say, however, that when you get this type of advice, you had best check it out with a lawyer experienced in this field while you still have options.

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Warner is a lawyer with expertise in divorce and elder care and Collins is a writer and editor. They are based at Columbia, S.C., and may be contacted at P.O. Box 11704, Columbia, S.C. 29211; or janwarner@nextsteps.net.