It's not the first prediction I've ever gotten wrong. For some people, though, it could have a huge impact on the financial lives of their families for generations to come.

Earlier this year, I warned investors that changes to the estate tax system were imminent. At the time, I believed that the odds were virtually zero that Congress wouldn't take some sort of action to fix what could become a huge issue for those with large enough estates to have potential estate tax liability. As it turns out, though, I was wrong -- and the consequences could be colossal.

Where we are
The uncertainty in the estate tax has existed ever since 2001, when a tax law change slowly increased the estate tax exemption over time. Since that time, the amount that each individual can pass to heirs without paying estate tax has risen from $1 million to its current level of $3.5 million. Beyond that, estates are subject to a 45% tax on the excess amount.

In 2010, though, the estate tax is scheduled to disappear for a single year, only to be replaced in 2011 by a tax taking effect back at the original $1 million level. For years, professionals have opined that there was no way that those provisions would actually be allowed to stand -- either opponents of the tax would find a way to repeal it permanently, or proponents of the tax would restore it during 2010.

As recently as a few weeks ago, it appeared that the latter would happen. But Congress adjourned without taking action, meaning that at least for a short time next year, the estate tax will be off the books.

Billions at stake
Given that the current exemption is relatively high, the disappearance of the estate tax may not seem like that big a deal. According to the Wall Street Journal, about 5,500 estates pay tax each year. That's not a huge contingent of people who'll be affected by estate tax repeal. Moreover, the tax generated only $25 billion in revenue during 2008 -- not insignificant, but just a small part of the overall federal budget.

Proponents of the tax, however, point to the impact that it has on the wealthy. Many wealthy people actually support an estate tax, arguing in part that it acts as an incentive for the rich to use their wealth for charitable purposes. For instance, by giving a steady stream of Berkshire Hathaway (NYSE:BRK-A) (NYSE:BRK-B) shares to the charitable foundation established by Microsoft (NASDAQ:MSFT) co-founder Bill Gates, Warren Buffett could reduce a potential multi-billion-dollar estate tax bill to nothing at his death.

One shouldn't dismiss the motives of philanthropists to do good things with their wealth. Many corporate leaders, including Whole Foods (NASDAQ:WFMI) CEO John Mackey, share a view of conscious capitalism, in which wealth maximization isn't the sole goal of business enterprise.

But it would be naive to think that tax avoidance doesn't play a role in why so many entrepreneurs establish foundations, including founders and major shareholders of companies like Hewlett-Packard (NYSE:HPQ), Ford Motor (NYSE:F), and Eli Lilly (NYSE:LLY).

How to plan
In the meantime, the uncertainty is throwing a major wrench into estate plans. Because so much of estate planning addresses how to minimize potential estate tax, its disappearance makes many of the tools you commonly find in wills and trusts at best moot and at worst potentially disastrous. If you have a will or trust that was designed with estate taxes in mind, it's worth having it reviewed in light of these new circumstances to make sure it will still work the way you want.

The real issue for most taxpayers will come in 2011, when the estate tax comes back with a vengeance, affecting anyone with $1 million or more. Most experts are predicting that Congress will address the issue early on when it reconvenes after the New Year's holiday and believe that lawmakers will attempt to make any changes retroactive to Jan. 1. But most of those experts will also admit that they expected a resolution long before now.

Moreover, the estate tax is just the tip of the iceberg. Many popular, relatively new tax reductions, including lower rates on ordinary income and preferential treatment for dividends and capital gains, are slated to come to an end next December.

Already, 2010 promises to be an interesting year for those who follow income tax law. To avoid making major missteps with their money, you'll need to follow developments closely throughout the year.

Want to make sure your estate plan is okay? Dayana Yochim has one piece of advice: don't die without reading this.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.