What is a divorce settlement agreement?

The settlement agreement will dictate the terms of your divorce, so make sure you cover all your bases.

Couple sitting across from one another in front of the water.

What's Inside

What's Inside

Terminating a marriage is never easy, especially when it comes to agreeing on all of the issues involved. These matters—which include the division of assets, financial responsibilities for each party, custody arrangements and more—should be addressed in the divorce settlement agreement.

If you’ve never heard of this document and talking through so many concerns feels a bit overwhelming, take a breath. This post addresses the most common questions related to a divorce settlement agreement, including what it should include, how to prepare one and when to consult a lawyer.

Divorce settlement agreement: the basics

A divorce settlement agreement is a legal document created by a couple who is filing (or has filed) for divorce. It can also be referred to as a:

  • Marital settlement agreement
  • Mediated agreement
  • Separation agreement
  • Property agreement
  • Collaborative agreement
  • Custody, support and property agreement
  • Separation and property settlement agreement

This agreement lays out the specific guidelines and terms for the divorce, including the division and distribution of assets, financial responsibilities, and child support and custody arrangements. If both spouses agree, the agreement serves as a binding contract that ultimately settles the divorce.

There are several benefits to reaching a divorce settlement agreement. For one, the divorcing parties give themselves the opportunity to end the relationship on their terms. For another, reaching an agreement may mean the parties can avoid court, saving them time and money.

Although you can create a divorce settlement agreement without an attorney, it’s recommended that each spouse hire an attorney to help draft (or at the very least, review) the agreement. You want to ensure that it’s fair to you and avoid any potential surprises in the future.

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What’s included in a divorce settlement agreement?

While every agreement is unique to the spouses divorcing, divorce settlement agreements typically include the following issues.

Division of assets

The division of marital assets should take the following factors into account:

  • Financial and non-financial contributions of each spouse to the marriage
  • Earning capacity of each spouse
  • Financial resources of each spouse
  • Retirement accounts
  • Length of the marriage
  • Any separate property each spouse holds
  • Joint debts (bank loans, credit cards, mortgages, etc)
  • Age of the parties

Below are a few steps you can follow to reach an agreement. Again, working with an attorney can help ensure both parties are protected.

  1. List your belongings. Make a list of all jointly owned property, leaving out any items you both agree are personal and/or of insignificant value. 
  1. Value the property. Agree on the value of each item worth more than a certain pre-agreed amount (for example, $150 or $400). For any items that are more difficult to value—such as a house or business—ask trusted outside authority. 
  1. Decide on the logical owner. Starting with the biggest items, go through your list item by item and determine who gets what. Many times, these decisions require give and take rather than coming down to the dollar value of the items. In the end, what matters is that you both are happy with the final agreement.

Child custody 

The question of custody and support for a couple’s minor children must be a part of the divorce agreement. When agreeing on these issues, the most important thing to consider is your child’s best interests.

It’s important to differentiate between “legal custody” and “physical custody”. Legal custody refers to the right to make important decisions regarding the child, such as education, where they live and health care. Physical custody refers to where the child lives on an ongoing basis. 

Some of the questions a sufficient settlement agreement should be able to answer include: 

  • Where will your children live?
  • Who will make decisions about your child’s education, religion and health care?
  • How many nights will they spend at each parent’s house?
  • How will you share holidays and vacations?
  • Who will pay for the costs of child care, health care and health insurance?
  • Who will pay for school and extracurricular expenses?
  • Will one spouse provide child support payments to the other?
  • What happens if one parent wants to move to another state or area?

Child support

Depending on several criteria, one parent may be responsible for paying child support to the other. The minimum amount depends on each state’s guidelines, but there are additional factors that need to be taken into account, including custody, visitation and the cost of health insurance, childcare, education and extracurricular activities. 

The agreement should also include the date that child support begins, the dates that child support should be paid, the method of payment and when the last child support payment should be made. 


Alimony (also known also as spousal support or maintenance) often may be necessary for marriages where one spouse earns significantly more than the other (for example, when one party is a stay-at-home parent). In such cases, the divorce settlement agreement should specify the terms of alimony, including:

  • Amount of award, if awarded
  • Type
  • Start date
  • Dates payable
  • Reasons for ending
  • Life insurance to protect in long-term marriage cases

While settling the question of alimony, both spouses need to be transparent about their situations and share financial disclosures. Here are some questions to consider when drawing up the terms of your spousal support: 

  • How long was the marriage?
  • Can one spouse provide alimony and does the other spouse need to receive it?
  • What are the financial positions of each spouse?
  • Does either spouse have health conditions that could impact their ability to earn?
  • How much is each spouse expected to earn in the future?
  • How long will the supported spouse need to be financially stable and independent through education, training or job experience?

Healthcare, health insurance, and life insurance

Details about healthcare, health insurance and life insurance for both spouses as well as children should include:

  • Insurance coverage and proof of premium payment
  • Orthodontic, dental, psychological and optical health
  • Co-payments, deductible and non-covered items
  • Length of obligation for each spouse
  • Continuation of health coverage by one spouse’s employer (COBRA), if applicable

College education of children

Some states can order college support for a variety of reasons. To reach an agreement on if and how one or both of the spouses will pay for their children’s college education, consider:

  • Age limits for education
  • Continuous education
  • Number of years
  • Schools to be used as standard/benchmark for costs
  • Ratio of payment by parents

Attorney fees and costs

The divorce agreement should also cover the payment of attorney fees and costs related to the termination of the marriage. 

Who writes the divorce settlement agreement?

While some couples may be able to agree on their divorce terms and write their own settlement agreement, not only is this usually unrealistic, the potential for making a costly mistake is high. For example, although divorce agreements are usually approved by the court, there are certain cases where a divorce agreement is rejected, often due to incomplete paperwork and procedures. 

In addition, without proper legal guidance, one of the parties could sign away important rights due to not clearly understanding the consequences. That’s why it can be a good idea to consult with a mediator or attorney to create a fair and sound divorce settlement agreement. 

Mediation can help divorcing parties reach a legal, enforceable agreement without taking sides, especially when a couple struggles to agree on the terms of their divorce. 

Attorneys, on the other hand, should be well-versed in the intricacies of each state’s divorce laws. This should ensure the court approves the agreement. 

Once you and your spouse both sign the divorce settlement agreement, it becomes a binding contract. It doesn’t go into effect, however, until a judge approves it, legally declares the end of your marriage and incorporates the settlement terms. The procedure for filing a divorce settlement agreement for approval by the court varies from state to state. 

It’s also important to note that although judges approve most agreements reached by a couple, they can make changes if they find the agreement to be unfair in any way. 

Do I need an attorney to prepare the divorce agreement?

Although you aren’t required to hire an attorney to draft the divorce agreement, it’s a good idea to do so. At the very least, have an attorney review the document before you both sign it. 

It would be easy for you to miss serious problems with the proposed terms or to fail to include specific words that protect your interests. An attorney can help you add, delete or correct legal provisions to ensure your rights are protected. 

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Can you change a divorce agreement?

It’s possible to alter the terms of a divorce agreement if you and your spouse agree to the change. 

  • For changes to property and financial division, you can file a request for a modification with the court. This process varies according to each state, which is why you may wish to consult with an attorney first. 
  • Modifications to child custody or support typically require proof of a substantial change in circumstances, like moving to a different city or state, or losing a job. Changes can also be made if they’re shown to be in the best interests of the children. 
  • It’s usually harder to make changes to alimony, unless the paying spouse is no longer able to pay due to job loss or other financial challenges. The ability to change this can also depend on the wording of the original agreement, so make it clear during the drafting phase whether or not spousal support can be adjusted later.

Also, if you or your spouse break any part of the settlement agreement, you each have the right to file a motion for enforcement with the court. This is obviously a difficult situation, since you’ll need to prove that a violation took place. Consult with a divorce attorney immediately. They can guide you through the steps to help you ensure that the violated terms are enforced.

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Disclaimer: This article is provided as general information, not legal advice, and may not reflect the current laws in your state. It does not create an attorney-client relationship and is not a substitute for seeking legal counsel based on the facts of your circumstance. No reader should act based on this article without seeking legal advice from a lawyer licensed in their state.

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