What Is A Divorce Settlement Agreement? – Forbes Advisor

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A divorce settlement agreement is a legal document laying out the terms of your divorce. You may have heard it described with other names, including:

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

What it’s called matters less than what’s included in the agreement. This document settles the terms of your divorce. If you can come to an agreement with your spouse, you can avoid having a judge divide your assets and property for you, making settling usually a better option than going to trial.

Divorce Settlement Definitions

Before we get into what is in a settlement agreement, we need to briefly define a few terms, including:

  • Marital property. Marital property is any item, asset or debt (with a few exceptions) acquired during the marriage. This includes income, your home, bank accounts, credit card debt and retirement accounts.
  • Separate property. Property acquired prior to your marriage is, in most cases, separate property and not divided in the divorce unless it is commingled with marital assets or your spouse helps you maintain or increase its value.
  • Community property states. In a community property state, marital assets and debts must be divided equally. There are only nine states that adhere to this definition: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin. Puerto Rico does as well and Alaska allows couples to opt into community property.
  • Equitable distribution states. Every other state uses equitable distribution, meaning a court looks at each case to determine what’s fair. While it sometimes results in a 50/50 split, the asset division often favors one spouse, even if just slightly.

Division of Assets

Courts divide marital assets according to the guidelines set out for them in state statutes. When considering how to divide assets, a judge usually is required to consider several factors, including:

  • What each spouse contributed to the marriage, both economically and non-economically
  • Earning capacity of each spouse
  • Financial resources of each spouse
  • The length of the marriage
  • Any separate property each spouse holds

When working to settle your marriage, you should consider the same factors. This will help to guide your decision-making and assist you in creating a fair division of assets.

If you and your spouse signed a prenuptial agreement before your marriage, its terms are used to divide your assets.

Child Custody and Child Support

Any divorce settlement agreement involving minor children is automatically much more complex. Every state begins an analysis of parental rights by considering what’s in the best interest of your child. If one spouse has been abusive or neglectful, then the other spouse may have a good argument for requesting full custody and substantial child support.

Courts also assume it is in the child’s best interests to have relationships with both parents and usually prefer 50/50 shared parenting responsibilities. This is what you need to decide when working out your own agreement:

  • Where will your children live?
  • Who will make decisions about your child’s education, religion and healthcare?
  • How many nights will they spend at each parent’s house?
  • How will you share holidays and vacation?
  • Who will pay child care, healthcare and health insurance costs?
  • Who will pay for school and extracurricular expenses?
  • Will one spouse provide child support payments to the other?

Any divorce settlement agreement must answer these questions. While you may want to fight for full custody of your child, consider what’s in their best interest.


Alimony, also called spousal support or maintenance, often occurs in marriages where one party earns substantially more than the other. A common example is when one spouse is a stay-at-home parent.

Consider several factors when deciding on alimony:

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

Make sure you and your spouse complete and share financial disclosures. This is required to ensure that each spouse is transparent about their financial situation and ensures a fair distribution of assets and debts.

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