What is one major purpose of establishing an estate plan?

Establishing an estate plan primarily serves the purpose of dictating the distribution of assets after an individual's death. This is a crucial aspect of financial planning because it allows individuals to clearly outline their wishes regarding how their assets should be handled, who will inherit what, and any specific conditions or stipulations they wish to impose on those distributions.

Effective estate planning helps ensure that an individual's legacy is protected and that their financial affairs are managed according to their desires, thereby minimizing potential conflicts among heirs and reducing uncertainties at a time that can be emotionally challenging for loved ones. By providing clear instructions, an estate plan can also facilitate a smoother transition of assets, potentially expediting the probate process and helping to avoid disputes.

While aspects like reducing income tax or setting up a business plan are important in their own right, they do not address the fundamental objective that an estate plan aims to achieve—ensuring that an individual's wishes regarding asset distribution are honored after their passing. Establishing a savings account also does not align with the primary focus of an estate plan.