Both promise to spread your capital gains tax over years instead of paying it all at once. But one runs your money through a private trust with a promoter-affiliated trustee; the other assigns your payments to a licensed third party funding an A-rated insurance carrier. The difference shows up the day something goes wrong.
A Deferred Sales Trust (DST) sells your asset to a private trust, which resells it and owes you an installment note the trust itself administers. A Structured Installment Sale (SIS) has the real buyer pay 100% cash at closing, then assigns the payment obligation to a licensed third party that funds a fixed annuity from an A-rated carrier. You get paid over time either way — the question is who's actually holding your money in between.
In a DST, your deferred proceeds sit inside a trust, invested by a trustee who is frequently affiliated with the firm that sold you the strategy. In a SIS, your deferred proceeds are held in a regulated annuity contract issued by an A-rated life insurance carrier — a company examined by state insurance regulators and backed by state guaranty associations up to statutory limits. One is a private financial relationship with a promoter; the other is a regulated insurance contract.
The SIS relies on IRC §453, the installment method, which has been settled law for roughly a century and is used routinely by sellers who simply carry a note for a buyer. The DST borrows the same general concept but wraps it in a private trust structure that has no dedicated statute and has drawn IRS scrutiny over constructive receipt — whether the seller retained too much control to really call the money "deferred." Read how §453 works without the trust layer.
DST setup fees typically run 1.5%-2.5% of proceeds up front, plus an annual trustee fee of roughly 1%-2%. On a $2,500,000 sale that's $37,500-$62,500 at closing and $25,000-$50,000 a year for as long as the trust pays you out. A SIS is priced inside the annuity contract the carrier issues — there's no separate trustee layer charging an ongoing management fee on top.
Control matters too: in a SIS, once the sale closes you're the payee of a fixed, contractual payment stream — you don't direct investments, and there's nothing to second-guess about whether you kept too much say over the money. In a DST, how much control the trustee genuinely exercises — versus how much the seller retains, formally or informally — is exactly the fact pattern an IRS exam would probe.
If your priority is the most conservative tax posture with a payment stream backed by an A-rated carrier, a SIS is generally the more defensible route. Business owners and property sellers with gains in the $500,000-$25,000,000 range are the typical fit. If you're comparing this to a 1031 exchange instead, see that comparison or read why 1031 traps so many sellers in replacement-property pressure.
Laid out this way, the two strategies solve for the same problem — a big gain hitting one tax year — but they ask you to accept very different counterparties to get there.
No. They share the goal of deferring capital gains but use entirely different legal mechanics — a SIS has no trust and no trustee; it assigns payments to a licensed party that funds a regulated annuity.
A SIS relies on the century-old, well-litigated §453 installment method and a regulated insurance carrier as obligor. A DST relies on a private trust structure with no dedicated statute, which is generally considered a less settled position. This is educational, not legal advice — talk to your own CPA or attorney.
Yes, that's the shared goal — spreading a large gain across years to keep more of it taxed at lower brackets instead of all at once at the top marginal rate plus NIIT.
Not after the fact — the structure has to be in place before your sale closes, ideally before you sign a purchase agreement. If you haven't sold yet, this is the moment to compare both.
Most fits are gains between roughly $500,000 and $25,000,000 from a business sale or investment property.
Plug in your sale price, basis, and state — the calculator runs your exact 2026 federal + California tax and shows what a Structured Installment Sale keeps in your pocket.
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Or talk it through: 213-340-2018 · Hans Goldstein · NPN 20602398. Educational only — not tax, legal, or accounting advice.
