So what’s the catch?

An SIS is irrevocable. Once it’s funded at closing, you can’t unwind it.

The carrier-funded annuity payments are non-commutable and non-assignable by you, the payee. That’s a structural requirement of §453 treatment, if the payments were freely convertible to cash, the IRS would treat the whole sale as a Year 1 cash transaction and the deferral wouldn’t work. So you can’t sell the income stream. You can’t pull a lump sum if something comes up. You can’t change the schedule once the carrier issues the annuity.

It’s a one-way door. That’s the cost of the bracket compression.

…because it runs like a Swiss train: a fixed schedule, set at closing.

The obligor on your payment stream isn’t the buyer who just walked away from escrow. It’s an assignment company, which funds your payments with a fixed annuity it owns from a highly rated life insurer. The payment is scheduled for every month, on the date and for the dollar amount printed on the contract.

Your payments depend on the assignment company and the claims-paying ability of the insurer behind its annuity. You are an unsecured creditor of the assignment company. Payments are not FDIC insured, and you should not count on state guaranty association coverage; it may not apply to this arrangement.

“Wait, isn’t this one of those J.G. Wentworth ‘it’s my money and I need it now’ things?”

No, and this is the single most common reason a deal dies. Someone in the seller’s life, a cousin, a brother-in-law, a friend at the gym, runs a 30-second Google search on “structured settlement,” lands on a secondary-market ad or a lottery-winnings horror story, and concludes the seller is being scammed. Deal dead.

The actual distinction is direction, not whether you’re a “receiver.” Both parties technically receive structured payments. The difference is which direction the deal runs:

• The J.G. Wentworth side, cashing out of a structure. Someone already has a structured-settlement annuity (usually a personal-injury or lottery payout). They want a lump sum today, so they sell their future payments to a factoring company at a steep discount, they take 50¢ or 60¢ on the dollar to escape the schedule. That’s the loss-of-value transaction the commercials joke about.
• The SIS side, entering a structure at face value. You’re going the other way. Your sale proceeds fund a brand-new fixed annuity, bought at face value by the assignment company from a highly rated life insurer, with the tax deferral of §453. No discount, no factoring company, no secondary market. The assignment company owes you the payments on a fixed contractual schedule.

One is the discount-store exit. The other is the wholesale entry. Same word on Google. Opposite direction of money.

Different product. Different direction. Different math. Same two words on Google, which is why this misunderstanding is rare-as-a-unicorn in practice but kills a real number of deals when it surfaces. Trust takes time. That’s fair enough. Run the calculator, read the carrier’s white paper, talk to your CPA. The structure is built on the installment method of IRC §453 (rewritten in 1980); no IRS ruling specifically approves the assignment structure, so have your own CPA or tax attorney review it.

“If I'm willing to take payments anyway, why not just take them from the buyer?”

Who do you trust more: an assignment company funded by a fixed annuity from a highly rated, heavily regulated life insurer, or the buyer's ability to keep paying you over the entire term?

That’s the problem the SIS solves.

Think about the last house you sold. The buyer got a mortgage. The BANK wired you the full purchase price at closing, not the buyer. You walked away with the check. You never followed up monthly to make sure the buyer was still paying their mortgage on time. You didn’t worry about whether they’d lose their job in year 12 and default. That entire 30-year credit-risk problem was the bank’s, not yours.

The SIS does the same job for the seller side. The carrier's assignment company takes the buyer's lump-sum at closing, the same way a mortgage bank takes the borrower's loan funds, and then makes the long-term payments to you. The institutional middleman takes the buyer’s place, so the buyer’s credit risk is gone. What remains is the credit of the assignment company and the highly rated, heavily regulated life insurer behind its annuity, much as a mortgage bank stands behind a loan. The direction of money flow is reversed; the trust architecture is identical.

Yes, you can take payments directly from the buyer, it's called seller financing or a traditional installment sale, and the §453 tax benefit works the same way. But you've now made yourself the bank for 10 to 25 years, and the risk profile flips entirely.

Buyer credit risk. Buyer life events (divorce, death, bankruptcy). Buyer wanting to prepay (which collapses your §453 deferral). Buyer wanting to renegotiate when rates change. Buyer moving across state lines making enforcement hard. Foreclosure costs if they default. Selling the note triggers a §453B disposition. You become the loan-servicer doing the admin work. No professional infrastructure behind a private note.

The SIS was specifically engineered to give you the §453 tax benefit while replacing your buyer with an assignment company as the obligor, funded by a fixed annuity from a highly rated life insurer, eliminating almost every buyer-side failure mode of the traditional approach.

Read the 10 reasons in detail →

99% of the time, we carve out cash at closing for your liquidity.

The irrevocability concern is real, and the answer is built into the structure: you take a cash carve-out at closing for the dollars you need liquid, emergency fund, replacement-home down payment, college tuition, debt payoff, the next 18 months of living expenses, whatever. That cash is yours, in your account, fully liquid, Day 1 of closing.

Only the remainder structures through the SIS into the carrier-funded annuity for the bracket-compressed lifetime payment stream. Typical split: 20 to 40% cash, 60 to 80% structured. Sometimes 50/50. Sometimes 15/85. There’s no fixed rule, the math works at any split, and we right-size the carve-out to whatever level of liquidity actually fits your life.

• Pool A, the cash carve-out: liquid, in your control, deployed however you need (debt payoff, replacement property, MYGA, market, business).
• Pool B, the SIS: the irrevocable but bracket-compressed structured stream, owed by the assignment company and funded by a fixed annuity from a highly rated life insurer. This is your fixed floor for 5 to 40 years.

The downside is real. The answer is the carve-out. Almost nobody puts 100% of the sale into the structure, and it shouldn’t be done that way.