In a few short weeks many more estates will be taxable. Here’s a summary of what the “sunset” of current tax law provides and what you need to know about how these changes will affect you and your family.

In 2001 Congress  restructured the estate tax laws  and passed a “temporary” ten year plan with a new estate tax structure.

In this ten year plan, the exemption for each person increased each year or two over the decade – until next year when EGTRRA sunsets and the tax rate goes back to what it was before EGTRRA

These annual changes to the exemption remind me of that well-known adage from Ben Franklin – “nothing is certain but death and taxes”. This has never been more true than now.

Here’s a recap of estate tax law for the past ten years. In 2001, the Economic Growth and Tax Relief Reconciliation Act (EGTRRA) imposed gift, estate and generation skipping taxes depending on the size of the gift or the size of your estate at death.

In 2009, the estate tax and generation skipping tax (GST) exemptions were both $3.5 million, the lifetime gift exemption was $1 million and the annual gift exclusion was $13,000.

On January 1, 2010, the estate and GST taxes were repealed. The gift tax rules remained unchanged except the gift tax rate dropped to 35%. But beginning in January – less than 5 weeks away- this same law (EGTRAA) provides that next year we go back to the past. For 2011, the estate tax exemption will only be $1 million. That means that many more estates will be paying estate taxes with a top rate of 55% of amounts over $1 million.

In the past ten years, tax experts and commentators almost without exception assumed that Congress would pass a new tax law to replace EGTRAA when it expired and that it would do what was originally intended – come up with a replacement for the law that reverts back to the  $1 million exemption.

Now commentators have reversed those predictions and most think it is very unlikely that a lame duck Congress will pass a new tax bill before 2011. It is also clear that if and when a new bill is passed, we can count on more changes after that. This means, more than ever, you will need to have your estate plans reviewed regularly.

For some couples who formerly were in no danger of paying federal estate tax, taking advantage of a basic plan that gives each spouse $1 million exempt for taxes ( and therefore doubles their exemptions for the family) is adequate protection.

For other people, additional tax planning will be needed to “redirect”  taxes to your favorite charity or family members.

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