About Larry Katzenstein, JD. Larry is a nationally known authority on estate planning and planned giving, and a frequent speaker around the country to professional groups. He divides his practice between representation of wealthy individuals in estate planning matters and serving as outside counsel to planned giving programs at charitable organizations nationwide. He is a frequent speaker on professional programs, appearing annually on several American Law Institute estate planning programs, and has spoken at many other national tax institutes, including the Notre Dame Tax Institute, the University of Miami Heckerling Estate Planning Institute, and the Southern Federal Tax Institute.
Larry has served as an adjunct professor at the Washington University School of Law where he has taught both estate and gift taxation and fiduciary income taxation. A former Chair of the American Bar Association Tax Section Fiduciary Income Tax Committee, he is active in the both ABA Tax Section and American College of Trust and Estate Counsel (ACTEC) charitable planning committees.
He is listed in Best Lawyers in America® 2015 (Copyright 2014 by Woodward/White, Inc., of Aiken, S.C.) in the field of Trusts and Estates. Larry was named the St. Louis Nonprofit/Charities Lawyer of the Year in 2011 and 2015, and the St. Louis Trusts and Estates Lawyer of the Year in 2010 and 2013 by Best Lawyers in America®.
He was nationally ranked in the 2009-2018 editions of Chambers USA for Wealth Management. He has served as a member of the advisory board of the National Center on Philanthropy and the Law at New York University. Larry is also the creator of Tiger Tables actuarial software, which is widely used around the country by tax lawyers and accountants, as well as the Internal Revenue Service. He received his undergraduate degree from Washington University in St. Louis and his law degree from Harvard.
Conversation with Larry Katzenstein
Eddie Thompson: Thank you for joining our podcast with Industry Icons. These are great conversations! I must confess, I am absolutely thrilled to have Larry Katzenstein with us. Larry is an amazing attorney. He is someone that I honestly, truly respect—his professionalism, his insight, and his knowledge. Larry graduated from Washington University, with an AB, and then Harvard Law School with a law degree in 1972. I wish I had time to list all the accolades, but Larry is truly an expert. We don’t have many experts in this world, but I honestly look up to Larry as one of those individuals. He has vast knowledge—not only is he knowledgeable, but he also has tremendous wisdom. So, Larry, thank you for joining us today.
Larry Katzenstein: Well, thank you! Thanks for those kind words, I really hardly recognize myself.
Eddie: Well, quick story. Larry and I first met three or four years ago at an ACGA conference. We were just chatting and come to find out we lived in the same town growing up, and his father was my family’s physician and delivered my two sisters! So, we’ve had a connection there, plus just the St. Louis area.
Let me begin by asking, what have you learned in your career that would be helpful to those who are just beginning their career or seasoned professionals?
Larry: I’ve had a lot of years now to serve planned giving programs and which ones are successful and what are the things that make them successful. I think the first and most important thing that I’ve learned is that what it really takes is patience and developing long-term friendships with donors. People give money to people they like. And, really successful programs are the ones that are really good at developing those friendships.
I know some charities, for example, travel around the country and visit with a donor 2 or 3 times without even asking for a gift, just to keep in touch and tell them what’s going on at the institution, and thank them for their previous gifts. Also, because of that, it requires a lot of patience. It really is a long timeline, often, to develop those friendships with donors. But I think that’s what it really takes to develop a successful planned giving program. Which means the people doing the visiting have to have the right kinds of patience or personalities to be able to develop those friendships. Get to know donors well, hear about their families, see pictures of their grandchildren, that sort of thing. That’s really what it takes. And, that’s what’s so difficult now. It’s so hard to travel, but I think that will change soon, I hope.
Eddie: I do, too. I really appreciate you mentioning the importance of developing relationships. I believe that is the one key to success. I don’t believe you’ll ever be successful by just having acquaintances. They’ve got to know you, and you’ve got to know them. There has to be that relationship because relationships are what trust is based, it has to come down to trust.
Larry: Oh, it absolutely is!
Eddie: What else have you learned in your career?
Larry: The other thing that I learned, which takes some learning sometimes for people who do planned giving, is that you need to be selling the institution, not the techniques. We get so enamored with all of the tools we have that we tell donors about. But, you’re not selling a Charitable Remainder Trust, you’re selling the institution. Concentrating on that, rather than showing why a Charitable Remainder Trust is so great, or some other technique, that a gift annuity is so great. One charity’s gift annuity is no better than any other charity’s gift annuity.
Larry: You may interest the donor in a charitable gift annuity, but they may decide to do it someplace else. So, those really have to be second.
Eddie: I’ll give you a real quick story, Larry. I had just gotten Crescendo, this is back in the early to mid-eighties when it was brand new, and I was showing a donor 80 pages on a charitable remainder trust. He looked pensive and puzzled and I asked if he had any questions. He said, “Eddie, all you care about is my money.” He was right, and it changed my career. It helped me understand exactly what you’re saying. People fall in love with the organization and its mission, and then there’s the opportunity. I tended early on, Larry, to get too technical, and I think you’re exactly right.
Larry: Yeah, I think that’s a common problem. You have to always keep the focus on the institution. As I say, every charity can offer you a Charitable Remainder Trust or a gift annuity. Harvard’s gift annuity is no different than Yale’s gift annuity.
Eddie: That’s exactly right.
What other comments would you make to help people as they really want to advance, not just their career, but their success in gift planning?
Larry: Another thing I would put in that list would be, often the lifeblood of planned giving programs is bequests. Often, that’s the first thing that donors offer—to put a bequest in their will. I think that is a good place to start because then you can go back to the donor later and thank them for their bequest intention; but, show them why if they just did this during lifetime through a charitable remainder trust, it would be better for them. You’re helping them improve their bequest because now they get an income tax deduction, now they can often increase their income because maybe before they had some stock paying a 1% dividend, they can sell it tax-free in a charitable remainder trust and increase their income. So, starting with the bequest and then showing them gradually why a charitable remainder trust, for example, might be better for the donor’s standpoint than the bequest. And, of course, it also makes it irrevocable for the charity.
Eddie: Exactly. There’s a theory that I’ve used for years, (Larry, I’d love to hear your thoughts on this), is an opportunity to go ahead and gift while you’re alive. Some of those resources might be used, like a charitable gift annuity. It’s kind of like giving money to heirs early to see what they do with it.
Larry: Yeah, that’s absolutely true! One of my favorite examples from my history that has always stuck with me is I had a client years ago who had a bequest in her will to the Missouri Botanical Garden, which is a world-famous garden here. One time we were meeting, and I said, “Why don’t you give them the money now? You’re in your eighties, you can afford it.” She had never thought about making some of those bequests lifetime gifts. It gave her so much pleasure to see that garden built during her lifetime. You get the rewards for the lifetime gifts you just don’t get with the bequests. She was so grateful that I had mentioned it to her. She took her friends to the garden the rest of her life. It was very rewarding for her.
Eddie: Larry, that raises a question I hadn’t planned to ask you, I hope that’s OK. In talking to this audience, most who are planned giving specialists or major gift asset fundraisers, what should be their relationship with professional advisors? I mean, I’m sure it would intimidate some folks in St. Louis to come to you as a planned giving officer at some college or something. But, what advice would you give development professionals in working with advisors?
Larry: Well, I think it depends, are you talking about advisors to the donor or advisors to the planned giving program?
Eddie: To the donor.
Larry: Yeah, they have to be part of the process because planned giving people can’t be giving legal advice to their donors. They have a conflict of interest, obviously. If the donor’s lawyer is involved early in the process, then they’ll fill their part of the team. That helps a lot. When I am asked to go meet with a donor with the planned giving person, I always want to have their lawyer there, if possible, so that they can, again, be part of the process. Whenever we draft documents, they’re not to be signed by the donor. They’re for the donor to take to the donor’s lawyer and review from the donor’s standpoint. So, I think that they just have to be part of the process to know. If they feel left out later, they may be the ones to say this doesn’t make sense for you and so forth.
Eddie: Right! I really appreciate that comment because I think it’s absolutely true. I would suggest that most attorneys want you to be successful as an organization, too. They’re your friend, they’re your advocate. They’re the ones who are basically going to draft whatever documents are included. They’re the advisor. We tell our planning clients that basically what we are is educators. Then, they go back to their advisors to review what we’ve suggested and let them execute it. The sooner you can engage the advisor, whether it’s an investment advisor, trust officer, but especially their attorney or accountant, the more successful you’ll be.
Larry: Not only more successful but, especially with larger gifts, is protection against Will contest. Often when someone, especially someone without children, has a large bequest of an estate to charity, second and third cousins suddenly appear. The best way to avoid those undue influence kinds of situations is to make sure that the donors’ counsel was always involved in the process so that no argument can be made that they were subject to undue influence.
Eddie: This shouldn’t have to be said, but I want to say it. I know a university that actually drafts wills and trusts for their donors at no charge. I would encourage every not for-profit to avoid that process.
Larry: I think that’s right. I don’t have a problem with a charity providing charitable remainder trust forms, which I usually prepare for them. But, they always are forms that they take to their lawyer. We would never draft irrevocable trusts or wills for a charity’s donor. I think standard documents like revocable trusts, which are pretty standardized, as long as they’re encouraged to take it to their lawyer and do that.
I would just add a couple other things on my list of things charities can keep reminding themselves of. One, is to be aware of unusual gifts, especially from donors that they’ve never heard of before. The donor who has real estate that they can’t get rid of and there must be some reason. They have no long-term relationship with the charity, or you hear of a lot of boats. So, be aware of those kinds of gifts would be another thing, I would say, to be very careful.
Eddie: Yes, I can think of several horror stories I’ve heard over the years. Fortunately, I’ve not been involved in one.
Well, we’re going to run out of time here in just a minute. Larry, I want to ask you, what has been the single most important lesson you’ve learned in your career?
Larry: I guess, to be a listener. Try to understand what motivates people. That’s something that lawyers are often not very good at, being good listeners. But, it’s so important for people involved in planned giving. Listen to the donors, see if you can understand what really motivates them, what really is behind their charitable intentions so you can understand why they want to do what they do. I think that’s really important for everybody, but especially for people in planned giving, and for lawyers generally.
Eddie: This has been an interesting conversation, Larry!
Larry’s taught at the Notre Dame Tax Institute, University of Miami’s Heckerling Estate Planning Institute, and the Southern Federal Tax Institute. Larry is truly an expert! But what I hope you heard on the call today was that the advice he gave was not technical. It was practical. The information he has shared is incredibly wise.
Larry, I can’t thank you enough for doing this today. I know you’re busy. An incredibly successful attorney in St. Louis, but speaks all over the country. Larry, I really not only respect you but I really appreciate you being with us today.
Larry: Thank you! It’s my pleasure, I’m happy to do it!
Eddie: Well, everybody, thank you for joining us on this podcast with conversations with industry icons. We’ve had Larry Katzenstein today out of St. Louis. He is an attorney with Thompson Coburn in St. Louis and a tremendous gentleman. I think that’s how I would end this discussion and description of him. Larry is a gentleman. So, thank you all for joining us!
Larry: Thank you very much.