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Present: Hassell, C.J., Koontz, Kinser, Lemons, Goodwyn, and Millette, JJ., and Russell, S.J. LADYSMITH RESCUE SQUAD, INC. v. Record No. 091388 OPINION BY SENIOR JUSTICE CHARLES S. RUSSELL June 10, 2010

DONALD H. NEWLIN, AS EXECUTOR AND TRUSTEE UNDER THE WILL OF MILLER HART COSBY, ET AL. FROM THE CIRCUIT COURT OF CAROLINE COUNTY Harry T. Taliaferro III, Judge This appeal questions the propriety of the circuit court's division and partial commutation of a testamentary charitable remainder unitrust over the objection of a charitable beneficiary. The material facts are undisputed and

the appeal presents a pure question of law. Facts and Proceedings Miller Hart Cosby (the testator) died a resident of Caroline County on March 17, 2004, unmarried and with no descendants. His will dated March 2, 1998, together with a

codicil dated September 25, 2002, were admitted to probate. The third article of the will gave all of the testator's stocks, bonds and other securities to trustees, to hold in a charitable remainder unitrust as recognized by certain provisions of the Internal Revenue Code. 1 The terms of the

A charitable remainder unitrust "is a trust in which no more than a specified percentage of the fair market value of the trust's assets (as determined each year), for a specified period, can go to the noncharitable beneficiaries; the rest

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trust required the trustees to invest and manage those assets for the benefit of four named individuals (the income beneficiaries) who were to receive the net income earned by the trust, or 6% of the value of the trust assets, whichever is less. The income was to be distributed annually, divided At

equally among them and payable in quarterly installments. the death of the last surviving income beneficiary, the

trustees were to distribute the residue of the trust assets to two named charitable beneficiaries: The Upper Caroline Volunteer Fire Department (Upper Caroline) and the Ladysmith Volunteer Rescue Squad (Ladysmith), in equal shares for their general purposes, provided those entities were charitable organizations within the contemplation of the Internal Revenue Code at the time of distribution. 2 The fifth article of the will contained a typical spendthrift clause, insulating the beneficiaries' interests from the claims of their creditors and denying the beneficiaries any right to encumber or otherwise control their shares until actually paid to them by the trustees.

belongs to a charity or charities designated in the trust." Estate of Tamulis v. Commissioner, 509 F.3d 343, 344 (7th Cir. 2007) (citing 26 U.S.C.

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