How To Create the Divorce Property Settlement Agreement?

Updated September 5, 2023
11 min read
How To Create the Divorce Property Settlement Agreement?


The divorce property settlement agreement is a crucial component of any divorce process. Not only does it outline how shared assets and liabilities will be divided, but it also offers detailed specifications to prevent future disputes over property division. Preparation is key when dealing with matters of such importance; an understanding of finances and legal implications is essential for a correctly structured divorce property settlement agreement.

Crafting a comprehensive divorce property settlement agreement can be complex, especially considering the emotional turmoil most couples endure during a divorce.  In the following sections, we’ll delve deeper into what a divorce property settlement agreement should contain, its types, and how to structure one to meet your needs and comply with your state laws.

What Is a Divorce Property Settlement Agreement?

A divorce property settlement agreement is a legally binding document between ex-spouses detailing the division of their joint and separate property. This agreement comes into the picture during a divorce when both parties involved need to distribute their financial assets and liabilities. It serves as a pivotal piece of paperwork in the overall process and is fundamental in ensuring that the legal division of property is done fairly, minimizing potential disputes.

The intricacies of a divorce property settlement agreement can include anything from marital homes, cars, and other physical assets to things like retirement funds and debts. It is a comprehensive documentation of accumulated wealth during the matrimonial period and even in certain circumstances. It's worth noting that creating a well-structured divorce property settlement agreement requires a thorough understanding of both parties' financial circumstances and a mutual agreement upon the division. The aim is to manage the economic implications of separation with as much fairness and precision as possible.

Types of the Property Settlement Agreements

The divorce process tends to deal with two major types of property settlement agreements. The specific type chosen can significantly influence the divorce property settlement agreement's execution and enforcement. Here's a breakdown of these types:

  1. Property settlement agreement divorce: This type of agreement is negotiated and approved by both parties without court intervention. It provides a certain level of flexibility, enabling you and your ex-spouse to freely map out the terms of your divorce property settlement agreement.

  2. Consent order: This is another type of divorce property settlement agreement that enjoys legal backing from the court. A consent order, submitted and approved by the court, encapsulates the agreed-upon terms of property division during divorce proceedings. 

By understanding these two primary types, you can more strategically choose your path while formulating your divorce property settlement agreement.

Property settlement agreement vs. Consent order

When determining the best approach for your divorce property settlement agreement, understanding the differences between a property settlement agreement and a consent order is crucial. Each has unique characteristics:

Divorce property settlement agreement:
  • Flexibility: A key strength of a divorce property settlement agreement is the level of customization it allows. Since it's negotiated and finalized outside of court, you and your spouse can tailor it to your unique situation.
  • Amicability: As couples negotiate terms directly, this type of agreement often encourages a collaborative and amicable separation process.
  • Enforcement difficulties: Despite its advantages, a divorce property settlement agreement may be more challenging to enforce compared to a consent order. If a spouse doesn't comply with the agreed-upon terms, it may require an additional legal battle to enforce it.
Consent order:
  • Court-approved: The court scrutinizes a consent order before it's decreed, ensuring that the agreement is just and equitable. This implies that it has direct legal backing from the onset.
  • Enforcement: Because a consent order is a court order, it is typically easier to enforce if the other party doesn't adhere to the terms. The aggrieved party can use court processes to ensure compliance.
  • Less flexibility: On the flip side, a consent order may offer less flexibility. The court's involvement could limit your freedom to tailor your divorce property settlement agreement to your circumstances.

Understanding these distinctions will allow you to make an informed decision, leading to a smoother progression through your divorce property settlement agreement.

Stages of Creation of Property Settlement Agreement

A divorce property settlement agreement requires careful crafting and scrutiny to ensure it appropriately represents both parties' interests during a divorce. Here are the stages to help create a fair and legally viable agreement:

  • Identify and value assets and liabilities: The initial step in creating a property settlement agreement divorce involves taking inventory of all the couple's assets and liabilities. Assets include property, investments, and bank accounts, while liabilities encompass all debts.

  • Contribution evaluation: Once the assets and liabilities are identified and valued, it's time to assess each party's financial and non-financial contributions to the accumulated wealth. Financial contributions might relate to income, while non-financial contributions can include things like childcare and housekeeping.

  • Assess future requirements: The next stage in crafting your property settlement agreement divorce necessitates considering the future needs of both parties. This includes factors such as their age, health, financial resources, and care of children.

  • Check for fairness: The penultimate phase involves ensuring the agreement is just and equitable according to the law. An independent solicitor can provide advice and double-check everything for you.

  • Legalize the agreement: Finally, once it is agreed upon, the divorce property settlement agreement can be finalized, signed, and, in some cases, made legally binding by court order.

Legal advice from professionals at Lawrina can provide crucial guidance throughout these stages. They can help you better understand the legal ramifications of each step, ensuring you create a divorce property settlement agreement that best meets your needs.

What Happens To Property Owned Before Marriage?

Determining what happens to property owned before marriage can be a critical aspect of a divorce property settlement agreement. The way premarital or separate property is handled entirely depends on the jurisdiction. In the U.S., there are two primary systems for marital property division: community property and equitable distribution.

Under the community property system, only the assets and income accumulated during the marriage are considered marital property and subject to division upon divorce. However, all property or assets owned before marriage, inheritances, and gifts remain separate property. Therefore, in a divorce property settlement agreement, separate property would generally not be divided.

On the other hand, in an equitable distribution system, all property, regardless of when or how it was acquired, can potentially be considered in the division. This means that even if you owned a property prior to marriage, it could potentially be subject to division. While this generally is not the case unless the property's value has significantly increased due to actions or investments during the marriage, it's something to keep in mind when creating a divorce property settlement agreement.

However, given the complexities and potential exceptions surrounding this topic, you should consult with a resource vendor to understand how your state laws may affect your property rights. They can provide real-life examples and interpret how the law applies in your specific circumstance before you incorporate such terms into your divorce property settlement agreement.

Key Elements of a Property Settlement Agreement

A divorce property settlement agreement is not merely a document dividing assets and liabilities; it's a legally binding agreement that encompasses numerous elements. This way, it ensures fair distribution and speaks to the complexities of each unique situation. One primary aspect is, of course, the division of assets such as shared homes, investment properties, financial investments, valuables, and vehicles. This is usually done equitably based on each party's contributions and future needs.

In addition, a comprehensive divorce property settlement agreement goes beyond material assets. It includes discussing liabilities (such as loans or debts), child custody and visitation rights, child and spousal support details, and provisions for future dispute resolution. Each of these elements is crucial, and missing anyone could lead to disputes or legal challenges. An often overlooked but important element also relates to the division of retirement benefits or superannuation, which should be laid down clearly in the agreement.

To help in getting these diverse factors in line, you can find some exceptional templates on Lawrina that can help you get started. A divorce property settlement agreement template can serve as a baseline, which you can then customize as per your circumstances — ensuring you have a comprehensive, legally sound agreement ready for execution.

How to make the divorce property settlement agreement?

Formulating a fair and equitable divorce property settlement agreement requires careful consideration, competent negotiation, and a thorough understanding of all involved factors. The process begins by itemizing your joint and individual assets and liabilities. Once the prospective list is ready, both parties discuss and negotiate their distribution based on their share or contribution to the acquired wealth. This list includes physical assets like property, vehicles, and valuable items and financial belongings like various savings and investments.

Developing a legally sound language for your divorce property settlement agreement can be challenging if you need to become more familiar with the legal jargon. In such a scenario, you can make use of a divorce settlement agreement template available on Lawrina. It will ensure that your agreement is structured properly, with well-outlined sections for all necessary details. After finalizing and signing the agreement, it becomes a legally binding document that both parties must adhere to.

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While the process of divorce is undoubtedly tough, finalizing an effective divorce property settlement agreement can significantly alleviate some of the stress associated with the process. Understanding the critical elements that go into this legally binding agreement is vital. These include the division of both physical and financial assets, addressing premarital property, as well as managing shared debts. It's also vital to consider future financial needs and any requirements related to children.

Deftly tailoring the divorce property settlement agreement to the needs and circumstances of both parties can indeed help lessen the complexity and fear often associated with these agreements. Taking the time to discuss, negotiate, and agree on the terms can pave the way for a smoother transition into separate lives. Whether you decide to enlist legal help or choose to do it independently using a template, the ultimate goal should be to create a fair agreement that fulfills both parties' needs and complies with the jurisdiction's legal requirements. It's a vital step toward an eventual peaceful separation and a new beginning for both individuals.

Frequently Asked Questions

What is the purpose of a divorce property settlement agreement?

A divorce property settlement agreement serves as a legally binding document that outlines how a separating couple intends to divide their shared assets and liabilities. The agreement provides transparent, agreed-upon terms, aiming to avoid future disputes regarding the division of property. It includes details of all assets, debts, and other financial implications connected to the couple.


By drawing up a divorce property settlement agreement, couples can not only ensure fairness but also hasten the divorce process, as this agreement helps make clear all financial division aspects. Therefore, it provides a platform for mutual agreement and cooperation during a challenging and often stressful time.


When should we have the divorce property settlement agreement ready?

Ideally, a divorce property settlement agreement should be prepared and finalized before the finalization of the divorce decree. Having an agreement ready allows the court to review it and ensure it is fair to both parties.


Trying to reach a settlement agreement after the divorce can extend an already stressful and emotional period and even lead to further disagreements or legal battles. A well-prepared divorce property settlement agreement can alleviate unnecessary complications and help speed up the divorce process.


Does a divorce property settlement agreement include a child or spousal support?

Yes, a divorce property settlement agreement often includes child and spousal support provisions. It serves as a comprehensive document addressing all financial aspects related to the dissolution of marriage. In addition to the division of property and debts, it outlines the obligations for alimony or child support payments.

The amount, frequency, and duration of these payments typically depend on a variety of factors, including the length of the marriage, the standard of living during the marriage, each party's income and earning potential, and the needs of any children. By incorporating such matters into the divorce property settlement agreement, both parties have a clear understanding of their responsibilities post-divorce.