Inheritance windfall/High assets - LOW income

swimcatsmom
Mon, 19 May 2008 09:56:02 +0000

The question of whether inheritance is income or asset in the first year is a critical one that I need to find an answer to as well. I guess if it’s income, there’s no hope for the first year. Unfortunately, I read that once they get an idea of what you can afford the first year, it’s very hard to change their impression of you in subsequent years.



My understanding is that for FAFSA the inheritance should be reported as income on worksheet B (untaxed income) in the year it is received and also that any balance remaining on the date you file FAFSA is reportable as an asset. Then it is possible to ask for a special circumstances adjustment. According to finaid the usual treatment by a financial aid officer would be to exclude it from income but it is up to their discretion.

I am not basing this on personal experience but on what I have read on CC and also finaid.org about special circumstance adjustments

from
[FinAid | Professional Judgment | Principles of Professional Judgment](http://www.finaid.org/educators/pj/principles.phtml)



The usual income adjustment for an inheritance is to eliminate it from income. (Inheritances usually show up as untaxed income on Worksheet B, since usually the estate and not the beneficiary pays the taxes. Most wills include clauses requiring the estate to pay all taxes. The main exceptions are for income earned by the estate after the date of death, inherited pensions and IRAs, and capital gains from selling property that was inherited.)