Updated on June 11, 2008.

LYN FREUNDLICH and her partner of 16 years, Billy Brittingham, are in many ways a typical family: They have two kids, own a home and have done basic financial-planning maneuvers like purchasing life-insurance policies. The one thing they don't have? A marriage license.

"We have made a very conscious and political decision not to get married," says 39-year-old Freundlich, who lives in Jamaica Plain, Mass. "Our reason not to get married had absolutely nothing to do with commitment. We've been together for a long time and worked hard on our relationship, and that's not going to change."

There were more than five million unmarried, cohabitating couples counted in the 2006 U.S. Census. That was a 43% increase from a decade earlier.

Why not just tie the knot? The reasons are plentiful. Same-sex couples living in any state other than Massachusetts (and California as of June 17, 2008) have no choice in the matter, since marriage isn't a legal option. More and more opposite-sex couples, meanwhile, are using cohabitation as a trial run before marriage. And in other cases, a partner would be financially punished by marrying perhaps by being written out of a parent's will because the parent disapproves of the mate. Still others are philosophically or morally opposed to marriage. For example, some straight couples are boycotting marriage until gay couples are given the same freedom.

Whatever the reason, cohabitation remains highly controversial. In fact, it's still considered illegal in several states. In 2004, a woman who worked for a North Carolina sheriff's office was given the choice of quitting or marrying her live-in boyfriend of 12 years when it was discovered they were cohabitating. She quit. Other states with laws against cohabitation are Florida, Michigan, Mississippi, Virginia and West Virginia.

Granted, cohabitation laws are rarely if ever enforced. (The penalty is typically a fine plus a short prison stay.) But that doesn't mean cohabitating couples are just like married folks, minus the marriage license. Married couples automatically enjoy financial and legal benefits such as the right to make health-care decisions on the other's behalf that cohabitators do not. "Under the law, [unmarried couples] are treated as separate people even if they've been together for 25 years," says Harold Lustig, author of "Four Steps to Financial Security for Lesbian and Gay Couples."

The good news is that with some careful financial planning, cohabitators can re-create some but certainly not all of the legal and financial protections offered by marriage. "Unmarried couples have to do more paperwork," says Dorian Solot, executive director of the Alternatives to Marriage Project and co-author of "Unmarried to Each Other." "You can't get everything, but you can get a lot of the most important protections," she says.

Here are the steps that all long-term cohabitating couples should consider.

First, Know the Limitations

According to a 2004 study by the Government Accountability Office, married couples are entitled to 1,138 federal rights, responsibilities and privileges that unmarried folks aren't entitled to. Factor in state rights, and the figure would be even higher.

Some of the biggest perks automatically given to married spouses include survivor benefits for Social Security; military benefits (including survivor benefits and education payments); family health insurance (including coverage by COBRA); the application of domestic violence laws; the right to seek spousal support during divorce; the transfer of property between partners without tax consequences (thus avoiding gift-tax and estate-tax); the right to seek compensation for the wrongful death of your partner; and the right to take sick leave to care for a seriously ill partner under the federal Family Medical Leave Act.

Careful financial planning will take you only so far. The federal tax benefits offered to married couples, for example, are simply unavailable to unmarried couples, explains Lara Schwartz, legal director of the Human Rights Campaign (HRC), the largest national gay and lesbian advocacy organization. Ditto for other federal goodies, like spousal and survivor benefits for Social Security. And while marriage is legal for gay couples in Massachusetts (and will soon be in California), those marriages are not recognized at the federal level. New Jersey, Connecticut, Vermont, New Hampshire and Oregon provide state-level protections through civil unions and domestic partnerships, but these relationships also do not receive federal recognition.

State benefits vary widely. Some state domestic-partnership laws apply only to same-sex couples, while others cover heterosexual couples as well, says Phyllis Bossin, chair of the section of family law at the American Bar Association (ABA). Other states don't recognize "palimony" (which is essentially alimony for long-term unmarried cohabitators, as made famous in the 1970s by actor Lee Marvin and his then-girlfriend). Adoption rules can also be wide ranging to the point where a couple might want to move if the local laws are unfavorable, says Schwartz. An excellent resource for learning more about state-level benefits is the ABA's white paper on same-sex marriages, civil unions and domestic partnerships.

Estate Planning
One area where unmarried couples can get similar benefits to married folks is estate planning. Keep in mind, these benefits won't come automatically the couple must take extra steps to ensure they're protected.

While a married spouse can inherit assets from his or her partner even without a will (assets are distributed according to state law), an unmarried partner will receive zilch. "That person, according to our law, is a stranger to you," says Schwartz. Without a will, your estate will be left to your next of kin whoever the state decides that may be, which can include estranged relatives.

Needless to say, failure to plan ahead can cause serious problems. "We get calls on a regular basis from people who didn't think about these things in advance and then they call us when there has been some crisis a partner died and they're wondering, 'What are my rights?'" says "The Alternative to Marriage's" Solot. Unless they've handled this in advance, "they often have no rights at all," she says.

The good news: If you create a will and name a beneficiary on financial accounts and insurance policies such as 401ks, IRAs and life insurance policies, your assets will be distributed according to your wishes. You can visit NoloPress.com for assistance with creating a simple will on your own. People with more significant assets would be better off using a lawyer ideally one with some experience in handling unmarried couples. A family lawyer who works with the gay community should be a good resource regardless of the client's sexual orientation, says Solot. The HRC Web site provides a list of resources.

Unfortunately, for those with large estates greater than $2 million in 2008 there's no getting around the federal estate tax, even if you leave everything to your partner. That's a benefit only a married spouse can enjoy. One bit of good news: The estate tax exemption jumps to $3.5 million in 2009 and is slated to be repealed in 2010.

Cohabitation Agreements
At its most basic, a cohabitation agreement (also known as a domestic-partnership agreement) outlines how finances will be handled between the couple while the relationship is intact, and, more important, how assets will be divided in a breakup. It can determine how bills will be paid (perhaps the higher earner will pay more), what the joint credit-card can or can't be used for, and who gets to keep the car in the event of a break-up. Each agreement is unique, based on the couple's situation, says certified financial planner Debra Neiman, who specializes in financial planning for unmarried couples.

For long-term cohabitators who might share joint bank accounts, a home and even children creating a cohabitation agreement is nothing short of essential. It's also an exceedingly delicate issue, says Frederick Hertz, an attorney in Oakland, Calif., and co-author of the Nolo Press book "Living Together: A Legal Guide for Unmarried Couples." Without it, things could get ugly. For example, one partner could quit her job to care for her partner or to run the household, only to find out when the couple breaks up, she's not entitled to any financial support.

State law should be factored into these agreements, so it's best for couples to work with a lawyer to draw up the contract.

A Health-Care Proxy & Durable Power of Attorney
Without a signed health-care proxy (a legal document that gives your partner the right to make medical decisions on your behalf) or a durable power of attorney (which gives your partner the right to make financial decisions), these judgments will fall to your next of kin, says attorney Wynne Whitman, co-author of "Shacking Up: The Smart Girl's Guide to Living in Sin Without Getting Burned." So unless you want mom, Uncle Frank or whoever legally fits the description of kin to handle such tasks, action must be taken.

It's possible that a domestic partner might not even be allowed visiting rights at a hospital, warns HRC's Schwartz. A health-care proxy should be sufficient to take care of this, although people might want an additional written and signed document expressing this wish explicitly. They should bring both to the hospital.

One note of caution: Never forget that these privileges carry enormous power. You might want to limit this by restricting the right to make these decisions to specific circumstances. For example, you could include language that states that financial decisions may only be made when you're unable to handle such tasks on your own. That said, if you have any doubts about the person's effectiveness or honesty, that person clearly isn't right for the job, notes Whitman.

Home Ownership
The key with home ownership is to decide ahead of time how the property will be held. Assuming it's a purchase that you and your partner are making together, your choices are "tenants in common" or "joint tenancy with the right of survivorship."

What's the difference? With joint tenancy, you and your partner own the house equally in the eyes of the law. So if one partner dies, his or her share automatically goes to the other, regardless of the terms of the will, says Hertz. (To cut down on potential hassles, your will and your title should agree.) With tenants in common, each partner's share goes to whomever is designated as the heir in the will, or if there is no will, the next of kin. The latter option is often used when the house is owned unequally, such as when, say, one partner (or that partner's parents) had contributed substantially toward the purchase.

Issues like how to split any capital gains are best covered in a cohabitation agreement, says Whitman. You might also want to consult with a certified public accountant about the best way to maximize homeowner tax deductions.