When two people are married, any belongings they have acquired and the debts they have accrued are called marital property. In the United States, each state has guidelines, also known as statutes or laws, which govern how this property will be accounted for and divided at the time of divorce.
A property settlement is the agreement by which the marital property is divided. This is a contract, because it is signed by both people and binds them both to the terms written out in the agreement. Most of the time, these agreements become part of the final dissolution documents or decree entered in the court where the couple gets divorced.
Once the property settlement agreement is signed, each person is responsible to abide by the decisions made. This includes being responsible for any debts assigned and complying with any requirements necessary to remove the other person from those debts. It also means that property allotted to each person forever after becomes their sole property.
Most of the time, property settlement agreements are straightforward, simply dividing things and assigning responsibilities. Every once in a while, they can become more intricate when there are items that take time to transition, or items that the parties agree to maintain in some kind of joint arrangement for a period of time.
When two people divorce, the process of crafting a property settlement agreement is intended to help restore each person to the status of single and unmarried as soon as possible, and to untangle any and all joint indebtedness and joint ownership that was based upon the laws governing their marriage.
