How to shack up smartly

You and your partner have combined your furniture, broken the news to family and friends and had serious negotiations about who will clean the toilet and who gets the bigger closet.

But if you're sharing an address without tying the knot — and nearly 85,000 Puget Sound-area couples fit that description — there are important legal and financial questions to consider, too.

Shacking up can have big consequences for your credit, your tax bill, your legal rights and your retirement planning.

Being legally married gives you a status under the law that unmarried couples don't enjoy. It pays to plan ahead, especially if you're planning to live together for a long time or if there are considerable assets at stake.

Documents such as wills, property agreements or power of attorney can protect you individually and as a couple. It's easy to put this off when things are going well — and potentially devastating when things aren't.

"Most people moving in together ... just want to cuddle on the couch," said Marshall Miller, co-founder of the Alternatives to Marriage Project. "Very, very few get it together to do this" kind of advance planning.

If a homeowner dies without a will, for example, his unmarried partner has no legal right to the house and could be evicted by his children, his parents or anyone identified as next of kin.

Unmarried couples "have to be more mindful," said Seattle attorney Lindsay Thompson. "Things you would take for granted if you were married may not apply."

That's true whether you're twentysomethings moving in together, divorced baby boomers, a same-sex couple or seniors concerned about losing benefits.

The bottom line: Many of the legal and financial safety nets in place for married couples are available for unmarried couples, too. You just may have to be a little more deliberate to protect yourselves.

Get it on paper

If you do nothing else, make a will.

"Without a will, it's very likely that nothing will go to your partner," said Seattle attorney Rob Morrison.

Blood relationships take priority over unmarried partnerships. Unless your will specifies otherwise, your estate passes to your next of kin — your children, your siblings or a distant cousin you haven't seen since you were 12.

"We get so many sad e-mails from people who thought they had been together so long that they would be protected," Miller said. "Then their partner dies, and the surviving partner finds out they get nothing."

Another option: Create a revocable trust and name your partner as sole beneficiary. This could make it a little harder for someone to challenge your decisions, said Wendy Goffe, an estate-planning attorney in Seattle.

And if you anticipate a battle between your partner and your family, Goffe recommends updating your will and other legal documents regularly to establish a paper trail and head off questions about the legitimacy of your partner's claim.

Cliff Duggan of Seattle and his partner, Bruce Erickson, have been together for 24 years but drew up wills only two years ago when they adopted a child.

However, they were careful even in the early years of their relationship to create a paper trail — both names went on apartment leases, utility bills, checking accounts. That helped when Duggan's employer began offering domestic-partnership benefits, allowing Erickson to obtain medical and life insurance coverage.

Spelling it out

A cohabitation agreement is a prenuptial agreement without the nuptials.

This document governs what happens if the relationship breaks up — and one national estimate showed 40 percent of opposite-sex cohabitors break up within five years of moving in together. It also can help establish who owns what if one partner dies.

Spell out what property each person is bringing into the relationship and decide how those will be divided if the relationship ends.

Then decide how major joint purchases will be divided. If you buy a new couch together, will you see a mediator or flip a coin for it if you split? And who will keep the dog?

If you're going to set up joint accounts, how will those be managed? No one spends more than $200 on a joint credit card without the partner's permission?

Finally, the agreement could state how major expenses will be handled. Will the rent or mortgage be split 50-50? Will the partner who makes more pay more? Power of attorney

There are two different kinds to think about — one for financial matters, another for health care.

The durable financial power of attorney allows your partner to manage your affairs if you are incapacitated. If you maintain a separate account, your partner won't have access to it to pay your bills without this document.

The health-care power of attorney is critical, Morrison said. It allows you to designate who will make health-care decisions about you if you can't. Without it, your partner doesn't have a say. Your relatives will have the right to make decisions about your health care.

And without this document, a hospital could refuse to even allow your partner to see you.

Joan Hansen, a Seattle attorney, said it's possible to name the people you don't want to be allowed to challenge your power-of-attorney designation. While you're at it, you'd be wise to consider a health-care directive or living will to give instructions about your wishes regarding life-prolonging measures. This makes clear your intentions and could avoid emotional battles between your partner and your family.

Unmarried money matters

Open some joint accounts, if you want, but make sure you maintain some accounts separately.

"Everyone should have an individual account ... to have some track record in your own name," said Rebecca Wakefield, a financial advisor with American Express Financial Advisors in Seattle.

And be careful about how quickly you start intertwining your finances. If your partner has a secret fondness for gambling or goes wild at the Pottery Barn with your joint credit card, you're liable for those debts.

Buying a house together

If you want to own the house together, there are a couple of ways to take title. If you choose to be "joint tenants with right of survivorship," you each own the house in equal shares, and your half automatically passes to your partner if you die, even if you have no will.

"Tenants in common" allows you to own the house in unequal shares. Your portion belongs to you, and you specify in your will who gets your share.

You may need to consult a professional about tax ramifications if you opt for joint tenancy. Ditto if you own a home and want to add your partner to the title.

And you may both need separate homeowner's or renter's insurance policies to make sure all the property is covered.

If you've reached this point in your relationship without having a cohabitation agreement in place, it's time to make one.

Steve Boyd, a senior manager with Deloitte & Touche in Seattle, said he knew a woman who bought a house with her boyfriend. When they broke up, he stayed in the house, she moved into an apartment and ended up paying her rent plus half the mortgage.

The couple sued each other, and ultimately a court ordered the house to be sold and the equity divided 50-50.

"If they'd had an agreement in place, they could have avoided huge problems," he said.

Pensions, life insurance, retirement accounts

Keep your beneficiary designations up to date. If you've listed a sibling or previous partner as your retirement-fund beneficiary, for example, he or she will receive that money on your death.

That's true even if your will specifies that a different person will inherit your estate. Your will doesn't automatically trump your beneficiary designations.

And because unmarried partners don't qualify for survivor benefits under Social Security, you may need to consider your retirement needs separately to make sure each partner saves enough.

Couples with children

An estimated 40 percent of children are expected to spend some time in a cohabiting, unmarried-couple household during their childhood.

Unless your partner legally adopts your child, he or she may have no right to visitation or custody if you die. That's true even if the partner has been functioning as the child's parent for years.

You can use your will to designate a legal guardian for your children if you die. But the interests of the biological parent, in many cases, will take priority over the rights of the person you name as guardian.

Issues for gay couples

Straight and gay unmarried couples "are pretty much in the same boat" when it comes to legal and financial matters, Morrison said.

But same-sex couples may find the paperwork and processes they encounter as they're trying to deal with these issues don't work as well for them.

Duggan, of Seattle, said on company forms, he writes down "partnered" instead of single. At the pediatrician's office, he crosses off "mother" and "father" on health forms and writes in "parent." He considers it a chance to educate people about domestic partners.

Gay couples also may be more likely to face discrimination or disapproving family members. The law recognizes these relationships even less than those of heterosexual couples, said attorney Thompson.

So everything said here goes double for you.