@stevemerr If the below circumstances apply to you then the FA administrator could possibly exclude the capital gain as income…
“There is also an exception when capital gains are realized as the result of
a sale of farm or business assets of a family if such sale results
from a voluntary or involuntary foreclosure, forfeiture, or bankruptcy
or an involuntary liquidation.” Section 479A(b)(1) of the Higher
Education Act of 1965 gives college financial aid administrators the
authority to exclude the proceeds of such a sale from income. However,
college financial aid administrators are unlikely to grant an
adjustment to income for capital gains in other situations."
If this doesn’t apply then I would ask the same question @thumper1 did, Could you use any of this money for college costs?
Unfortunately, you will get hit in terms of financial aid for the inflated income due to the capital gains if the above doesn’t apply.
I’m not well versed in annuities or the advantages/disadvantages of them, but I do know that while annuities don’t have to be reported on the FAFSA they do have to be reported on the CSS profile, which would impact institutional aid.