2006: Kathy Mershon’s life was turned upside down when the car she and her family were traveling in skid off the icy road to Wildwind, and into an embankment. Julia Keefer and Jamie Martin found Kathy unscathed in the back seat. The doctor did all they could to save her parents, but their injuries were too severe. In her final breath, Kathy’s mother, Linda Mershon, made her old friend Julia promise to care for Kathy.
Kathy moved into Wildwind and formed an instant bond with Julia. She also became very close to Tad Martin, who helped her come to terms with her parent’s death.

2007: Kathy and Julia were in the park when Tad learned his beloved Dixie Cooney had died. Dixie was Kathy’s biological mother. As Dixie’s spirit passed on, she made contact with Kathy and realized she was their missing daughter Kate Martin.
Kathy enjoyed life at Wildwind, especially when Annie McDermott moved in with her daughter Emma Lavery. Emma and Kathy became fast friends. Julia formally adopted Kathy. She decided to take Kathy to California to meet the rest of the Santos family. Kathy was back in Pine Valley in time for the holidays.

2008: Julia made plans to move with Kathy to Australia. Their new life would never happen as Julia was killed by Ray Gardner at the Hubbard wedding. That night, Tad was shot as well and lay near death. Adam Chandler had a revelation: Kathy was Tad and Dixie’s biological child. Dr. Greg Madden had put Kathy up for adoption and eventually in the care of the Mershons. Kathy had a lot of adjusting to do. Instead of heading back to California to be with Julia's sister Maria Grey, Kathy agreed to stay with Tad and his new wife, Krystal Martin.
Kathy acted out against Krystal. She wanted all her father’s attention. Sh pushed Krystal off a ladder and into her little sister, Jenny Martin’s, play pen. Krystal brought Kathy to a psychologist hoping that it would help Kathy with her adjustment.
Krystal began to send Kathy and Jenny to stay with their grandmother Opal more and more. Tad had gone to Africa after Jamie and Jeff Martin were reported missing. Krystal had began an affair with David Hayward in Tad’s absence.