Money from a spouse’s life insurance payout for sure means that you can ask for “professional judgement” on what is considered “normal assets”. UVM sounds like it could work! The policies and standards aren’t set up to punish families like yours- they’re meant to make sure that a “Trust Fund Kid” (third generation wealth, parents earn $50K per year but live in a multimillion dollar home with grandparents taking the kids to Europe every summer, pay for every “extra”) isn’t getting subsidized by the taxpayers of Vermont.
Condolences. Raising kids without a partner is challenging…. hats off to you.