I'm building a retirement home in a small town on Lake Erie. We moved to Michigan from New Jersey -- temporarily -- a dozen years ago when my husband got an irresistible job offer. We always thought we'd move back soon -- but the date kept getting pushed back further and further.
When the real estate meltdown happened in 2008, we had an opportunity to use money from my self-directed individual retirement account to buy a piece of property on the lake out of bankruptcy at a fire-sale price.
About a year and a half ago, we started our retirement planning and the building effort in earnest. It has been an eye-opening experience. Here are a few things I've learned.
Shop carefully for a trustee. I chose a company I had written about -- even interviewed one of its top executives -- but I was unprepared for the complexity of the transaction. Because the trustee wasn't in Michigan, its policies and employees weren't familiar with Michigan laws. Also, the company does big business in self-directed IRAs with a small staff; no one there had any time to answer questions. If I had to do it all over, I'd find a trustee who handles a few investors and is located nearby. The fees might have been higher, but the aggravation level surely would have been lower.
Be realistic. Building a home that is both green and retirement friendly isn't always possible. The house we're building is in an area that is highly regulated. Because it is on Lake Erie and in the Detroit International Wildlife area, everybody gets to add a few rules and regulations to the pile. We would have liked to have had a windmill to generate electricity, but that went by the wayside early because of both municipal and state regulations protecting wildlife and the neighbors' views -- and ears. We wanted to avoid steps, but we couldn't because the Federal Emergency Management Agency and the Environmental Protection Agency both dictated that the house be about five feet off the ground.
Find a good lawyer. You'll need him. With his help, we finished the last of the paperwork about a month ago. Forty-two steel pilings have already been pounded 20 feet into the ground, and the masons are finishing the foundation this weekend.
Pick a good trustee, Part II. The final bit of bureaucratic irritation yet to be resolved is the retitling of the property. When you put a property in a self-directed IRA, it has to be titled to that effect that it is held by the trust. When you pull the property out of the self-directed IRA and pay taxes on it, it has to be retitled. The forms reflecting our new title arrived from the trustee at our lawyer's on Friday. They were signed in blue ink -- but Michigan law specifies -- over and over -- that they only can be signed in BLACK ink. Eeeek.
The only comfort is that I think I have chosen the right small town in which to retire. People here really are nice. For instance, the woman who manages the municipal planning and zoning office actually chose to sit across the table from us at the the town picnic yesterday. It's the little things that make you grateful.