OP is aware that a $100k windfall can at least reduce, or even possibly eliminate financial aid. Which means that the inheritance can be greatly diminished. Even if counted as 529 -asset only— best scenario, not getting counted as income by the school when he gets it, and if he , that’s about $6k a year less of financial aid. That’s if his school doesn’t look at it as income. He can then remove the money after he finished school paying federal taxes on gains only, and likely very little or no State tax recapture as it’s unlikely kid had much income to take that deduction. Best case scenario is that he pays $18k more in college costs. i
But that’s if his school doesn’t have other rules on the situation. As I mention a number of times, schools can have whatever rules they please on these things and their money. If they look at it as income, he loses all financial aid that year. If he is getting substantial financial aid, it’s likely not from the government. You can’t get $20-30-40-k+ From federal funds. School is throwing in their own money in such cases, and yes, they can take it all over several years with college costs as they are