A client, anticipating a lump-sum inheritance of $400,000 in 18 months, plans to immediately use $350,000 of it to pay off their mortgage. However, they are currently contributing to a TFSA and RRSP. Which of the following is the most important liquidity constraint to document in their IPS concerning the inheritance?

Question: A client, anticipating a lump-sum inheritance of $400,000 in 18 months, plans to immediately use $350,000 of it to pay off their mortgage. However, they are currently contributing to a TFSA and RRSP. Which of the following is the most important liquidity constraint to document in their IPS concerning the inheritance?

Answer options:

• The 18-month time frame until the inheritance is received. ✅ The specific $350,000 destined for mortgage repayment.
• The need to continue TFSA and RRSP contributions.
• The client's current emergency fund availability.

Correct answer: The specific $350,000 destined for mortgage repayment.

Explanation: The specific $350,000 allocation to mortgage repayment represents a significant, non-negotiable liquidity event. The IPS must account for this fixed future outflow to ensure the funds are available without market timing risk at the desired time, making it the most critical liquidity constraint.