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Judge agrees to reclassify Cushman Rice trust fund

WILLMAR -- A judge has agreed to reclassify the Cushman A. Rice trust fund's legal status, clearing the way for the trust to keep its focus on helping needy patients pay their hospital bills.

At a hearing in Willmar on July 23, Eighth District Judge Donald Spilseth ruled the trust meets the requirements to be classed as a supporting organization for a public charity.

There will be one ch-ange, ho-wever.

Two me-mbers of the hospital bo-ard will join Bremer Investment Management and Trust of Marshall as the trustees for the $2 million fund.

The Internal Revenue Service has yet to make a final determination, a process that might take several months, said Mike Schramm, chief executive of Rice Memorial Hospital.

But the city-owned hospital will move ahead and appoint two board members in the near future, Schramm said last week.

"We can then start to operate the trust going forward as we want to," he said.

The Rice trust holds a unique place in local history. The Rices, one of Willmar's earliest leading families, made a fortune in banking and lumber. When Col. Cushman A. Rice, the family's last surviving descendant, died in 1932, he left an endowment for the city of Willmar to build what is now Rice Memorial Hospital. His will also included a provision for creating a trust fund to help pay for hospital care for the neediest patients.

The trust was formally recognized by the IRS in 1948 as a public charity.

And that's how its status remained until 2007, when the Pension Protection Act bumped it out of this category into that of a private foundation.

The new classification meant the Rice trust now had to pay an annual excise tax and distribute 5 percent of its assets each year.

The concern of Rice Hospital officials was that the value of the trust would eventually erode, making it increasingly difficult for the fund to fulfill its original purpose. In most years, the trust distributes about $75,000 in grants that are applied toward paying the hospital bill for eligible patients -- typically people who don't qualify for public assistance and have no other means of paying.

Hospital officials and Bremer Trust have been working for the past several months to restore the Rice trust to its original status as a public charity.

Anne Polta

Anne Polta covers health care, business/economic development and general assignment. Her HealthBeat blog can be found at Follow her on Twitter at @AnnePolta.

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