What is the purpose of estate planning?

The purpose of estate planning is to manage an individual’s asset base in the event of incapacity or death. This involves preparing documents such as wills and trusts that dictate how assets will be distributed, who will care for dependents, and how financial responsibilities will be handled when one is no longer able to manage them. Through estate planning, individuals can ensure that their wishes are honored, avoid potential disputes among heirs, and facilitate a smoother transition of assets, thereby protecting the financial well-being of their loved ones. This process also helps in minimizing the impact of taxes and other expenses that may arise from the transfer of assets.

The other options do not accurately reflect the primary objective of estate planning; managing debt in retirement focuses more on budgeting and financial management during one's later years, while ensuring tax evasion is illegal and not a legitimate goal of any financial planning. Increasing investment opportunities relates more to asset growth strategies rather than the distribution and management of assets upon death or incapacitation.