Difference Between a Final Divorce Decree and a Settlement Agreement

Stockbyte/Stockbyte/Getty Images

In many conversations, the terms settlement agreement, divorce decree and divorce order are often used interchangeably. Although they colloquially refer to the documents used in a divorce, a settlement agreement and a final divorce decree are not the same. In short, the difference between a marital settlement agreement vs. a divorce decree is that a settlement agreement is the set of circumstances that will apply to a divorced couple’s lives after their divorce, whereas the divorce decree is the actual court order that legally ends the marriage.

Divorce Decree Covers Settlement Terms

Whether a couple’s divorce is determined in court or they complete an out of court divorce settlement, their divorce decree is legally binding. The terms in a couple’s settlement agreement are generally worked into their divorce decree, though the court may require that certain changes be made before finalizing the decree.

Marital Settlement Agreement vs. Divorce Decree

Understanding the difference between a marital settlement agreement vs. a divorce decree can be confusing because the two documents contain similar information. Here is a significant difference: While a couple may decide their own settlement agreement, only the court can issue a divorce decree. Once a divorce decree is issued, the couple’s marriage is over. In some cases, a couple’s settlement agreement can be submitted to the court, approved and turned into the divorce decree.

Contents of a Divorce Settlement Agreement

A divorce settlement agreement is a document that outlines all of the terms of a couple’s divorce, including:

• How the couple’s property is to be distributed.
• The couple’s spousal support arrangement, if one exists.
• The couple’s child custody arrangement, if one is necessary. 
• Any other relevant terms, like an agreement that one spouse will cover the other’s divorce-related court costs.

In some cases, couples reach their own out of court divorce settlement with no outside help. In other cases, the couple works with third-party professionals, like a financial adviser or a real estate appraiser, to value and divide their marital property. The couple may revise their settlement agreement multiple times before submitting it to the court for final approval.

A divorce decree is finalized after the couple submits their marital settlement agreement to the court. This happens when the couple agrees to the terms of their divorce decree property settlement agreement and the other terms of the settlement agreement. If the couple does not agree about these issues, the court may need to investigate their case and make determinations based on what it deems appropriate.

Finalizing a Divorce Decree

Couples who opt for out of court divorce settlements craft their own settlement agreements with help from their attorneys. Usually, a property settlement agreement is approved by the court and generally, this is also the case for spousal support agreements. However, unlike a property settlement agreement, the court generally must approve a child custody arrangement to ensure that the arrangement is in the best interest of the couple's children.

Similarly, couples usually cannot determine their own child support agreements because in most states, child support is determined according to a formula that guarantees that the children receive a specific amount of financial support from each parent.

A final divorce decree is a court order. Once it is entered, it is public record and the couple must comply with it. Failure to comply with a divorce order’s terms, like an alimony payment schedule or relinquishment of certain assets to one’s former spouse, is considered contempt of court and can lead to civil and even criminal penalties for the violating party. Couples whose divorce orders no longer suit their lifestyles in the years following divorce may petition to modify the orders to bring them into line with current needs.