The museum, which told the story of Katikati from early Maori settlement through to the kiwifruit and avocado industries, was Nancy's passion.
She and Ken poured tens of thousands of dollars into obtaining their collection and countless hours creating the museum before selling it to a charitable trust in April 2012 for $950,000.
The trust, made up of volunteers from the Katikati community, banded together to keep the museum running with the backing of the district council.
"We were intending to auction off the collection when the community put forward the proposition to take over the museum," says Nancy. "We were delighted that this was to happen and made huge financial sacrifices to enable it to happen."
The Western Bay of Plenty District Council acted as guarantor for the Katikati Heritage Museum Charitable Trust to obtain a bank loan of $550,000.
The Merrimans gave the trust an interest-free loan for two years of $450,000 to make up the balance and a little extra.
Nancy says she and Ken gave the loan because they wanted the museum preserved for future generations. She says they transferred the museum to the trust as a viable business concern, including handing over $40,000 of stock in the gift shop and a working cafe.
"The museum was an absolute asset. We gave all that up to the community."
However, business did not go well at the museum after Nancy and Ken left, and Nancy was shocked to learn via a media report in June this year that the museum had closed its doors.
Now, Nancy and Ken stand to lose most of the money they loaned after the trust received an offer of $615,000 for the museum property. The offer is $270,000 below its rateable value, and the trust lawyers acknowledge the Merrimans are unlikely to recover any real repayment of their loan.
The trust, however, says the sale is inevitable.
The council has already bought the museum collection for $40,000 and put it in storage - a situation that angers Nancy.
"We never gave it to them [the trust] to be put into boxes. The museum artefacts are the property of the Merriman Family Trust now that the museum has been closed," she claims.
Nancy says her anger over the museum sale is not directed at the trust, but she is concerned the council is influencing its decision.
"We're concerned that the trust is being forced into a firesale simply because of the council's neglect and short-term view."
COUNCIL'S VIEW
However, Western Bay of Plenty District Mayor Ross Paterson says the council has no role in the sale.
'It is the sole responsibility of the trustees to agree or otherwise whether the sale proceeds. It is not council's role to enter into discussions with the Merrimans on what is a trust issue."
He also stresses the council's only involvement in 2012 was guaranteeing the bank loan for the trust because of significant community interest at that time in preserving the museum.
"[But] the bottom line was that the trust could not make a viable business interest."
Apart from acquiring the museum collection for $40,000, the council gave $10,000 to the museum from a contingency fund in the trust's second year of operation, when it became apparent it was running up debts.
But Mr Paterson says there is no mandate in the council's 10-year plan for further spending on the museum and buying the Merriman site is not an option.
He says the council is holding the museum collection for the Katikati community with a view to possible future display at the old Katikati Fire Station.
The council owns that building and, although it would need earthquake strengthening, Mr Paterson says it would be cheaper than the Merriman property.
He expresses sympathy for Nancy and Ken, who have been involved in local schools, sports and community organisations for more than 50 years.
"I'm really sorry for the way it's turned out," Mr Paterson says.
THE MUSEUM TRUST
The museum trust also expresses regret at the Merrimans' situation, but says the sale is inevitable.
"We can understand all the feelings and the anger. We're not terribly comfortable with the situation either," says trustee Brendan Gibbs.
"It's a course we have to follow. The museum has collapsed. It hasn't got the finances to alleviate its debts and the property has to be sold."
Mr Gibbs says the trust worked hard to find a solution with the council, but was told the council did not have finances to buy the museum allocated in its 10-year plan.
The trust lawyers advised that in the face of mounting debts, the property needed to be sold, and Mr Gibbs says it is the honourable thing to do.
"It would just be totally irresponsible to let it continue. The Merrimans could've lost out altogether."
He says staff put in to run the museum cafe after the Merrimans sold to the trust did not do so well and left owing the trust money.
They were replaced by cafe managers who were starting to make ends meet when the trust discovered other debts.
Mr Gibbs says the low conditional sale price reflects tough times for businesses in Katikati.
"It would've been lovely if someone had come along and paid the rateable value. But at the moment, the market value is very, very low. "
The offer requires the agreement of the three trustees, two of whom are overseas at the moment.
It is expected the trust will be wound up when the property is sold.
Alistair Boot, the original chairman of the trust, says he is heartbroken about the likely sale and feels desperately sorry for Nancy and Ken.
He believes the fault lies in poor management, and he quit the trust after disagreeing with a decision by other trustees to employ a manager for the museum.
He was told the manager was paid about $45,000, a cost he believed the museum could ill afford when, he says, there were many willing volunteers in the community "who would've jumped at the chance to run the museum".
The trust had more than 70 volunteers when it was formed.
The current trust chairman, district councillor Mike Williams, is one of those overseas, but Brendan Gibbs says he is also distressed about the sale.
FAMILY RALLIES
In the wake of the revelation about the heavy financial loss Nancy and Ken are likely to suffer, the Merriman family has rallied behind the elderly couple.
This week, their granddaughter Rebecca, 31, wrote to community leaders to express her outrage.
She cried as she told Bay of Plenty Times Weekend how her grandmother's greatest hope is for the museum to continue and how its closure is a loss to the region because of the thousands of schoolchildren and tourists who used to pass through its doors.
"My grandmother would get tourists in. She was always promoting the Bay of Plenty. I don't know how many holiday plans she changed."
Rebecca says Nancy moved herself and Ken out of their house on the museum property because she wanted to give the trust another potential income source.
"She gave everything she could to keep it going. It's just so wrong. She went over and above what she needed to do."
Keith and Denize Anderton, Nancy's brother and sister-in-law, are urging locals to pressure the council to repay the Merrimans their loan.
"Nancy and Ken have always promoted and supported Katikati and now look at the thanks they are receiving."