Property Settlement Agreements (PSA) in Virginia: What to Include

The Property Settlement Agreement is the single most important document in any Virginia divorce. The PSA determines what each spouse will own, what each spouse will owe, how the children will be raised, and what each spouse’s financial obligations to the other will be — sometimes for life. Mistakes in a PSA are very hard to undo after the decree is entered. Understanding what belongs in a PSA — and what to look out for — matters enormously.

What Is a Property Settlement Agreement?

A PSA is a written contract between two spouses that resolves the rights and obligations arising from their marriage. In Virginia, a properly drafted PSA can be enforced as a contract under Virginia Code § 20-155. Once incorporated into a final divorce decree, it is also enforceable as a court order — meaning violations can be addressed by contempt proceedings, not just by breach-of-contract suits.

A PSA can be signed:

• Before the divorce is filed (often called a Separation Agreement);
• During the divorce process, ending the litigation;
• At trial, as a recital placed on the record.

What Should Be in a Virginia PSA?

1. Identification and Recitals

Names of the parties, date of marriage, date of separation, residence, number and ages of any children. The date of separation matters because it typically defines the cutoff for marital property under Virginia’s equitable-distribution statute.

2. Real Estate

• Which spouse keeps the marital home, if either;
• Refinancing timeline to remove the other spouse from the mortgage;
• Equitable offsets (e.g., one spouse retains the home, the other gets a larger share of retirement);
• Treatment of investment properties, vacation homes, and inherited real estate;
• Listing and sale terms if neither spouse retains the property.

3. Retirement Accounts

• 401(k), IRA, defined-benefit pension, federal employee plans (TSP, FERS, CSRS);
• Marital vs. separate portions (with the coverture fraction for pensions);
• QDRO provisions — including which party prepares the QDRO and who pays the fee;
• Survivor benefit elections.

4. Bank, Brokerage, and Investment Accounts

Allocation of all financial accounts as of the date of separation. Embedded tax liability (basis differences between accounts) should be considered when offsetting accounts of similar gross value.

5. Business Interests and Equity Compensation

• Closely held businesses, professional practices, partnership interests;
• Stock options, RSUs, performance shares (vested and unvested treatment);
• Deferred compensation;
• Method of valuation and date of valuation;
• Buyout terms if one spouse retains the interest.

6. Debts

Allocation of credit-card debt, vehicle loans, student loans, mortgages, and any business debt. A balanced asset split can leave one party dangerously exposed if they remain legally liable on debt tied to assets the other party controls. The PSA should address refinancing or indemnification for those debts.

7. Spousal Support

• Amount, duration, and form (lump sum vs. monthly payments);
• Whether the support is modifiable (this is the single most consequential drafting question);
• Termination events (death, remarriage, cohabitation);
• Tax treatment (post-2018 awards are not deductible to the payer or includible to the recipient, but state and grandfathered cases may differ);
• Security — life insurance, salary deduction, escrow.

8. Child Custody and Visitation

The PSA can incorporate a detailed parenting plan or reference a separate one. Either way, the document should address:

• Legal and physical custody;
• Regular schedule, holidays, summer, vacation;
• Decision-making (education, healthcare, religion, extracurriculars);
• Communication between child and non-custodial parent;
• Transportation and exchange logistics;
• Relocation notice provisions;
• Right of first refusal.

9. Child Support

Amount, payment method, healthcare allocation, work-related childcare allocation, extracurricular allocation. The court retains jurisdiction to modify child support regardless of the agreement’s terms, but the agreed amount controls until modified.

10. Tax Provisions

• Dependency exemptions (Form 8332);
• Filing status for the year of separation and divorce;
• Allocation of refunds and liabilities for joint returns;
• Treatment of carry-forwards (capital losses, NOLs);
• Indemnification for tax deficiencies.

11. Health Insurance and Other Benefits

Continuation of coverage, COBRA elections, allocation of premium costs, and life-insurance security for support obligations.

12. Boilerplate (and Why It Matters)

• Mutual release of all claims;
• Choice of law (Virginia);
• Severability;
• Integration (the PSA is the complete agreement);
• Attorney fee provisions for enforcement;
• Dispute resolution (mediation, arbitration) before litigation;
• Incorporation into the final decree.

When Is a PSA Enforceable?

A Virginia PSA is enforceable as a contract when it is:

• In writing;
• Signed by both parties;
• Entered into voluntarily, with full understanding of the terms;
• Not unconscionable on its face.

Notarization is not strictly required for enforceability but is standard practice. Each spouse should ideally have independent counsel review the document before signing.

Common PSA Mistakes

• Failing to address all retirement assets — especially small IRAs and forgotten 401(k)s from prior jobs;
• Ambiguous spousal-support termination — the “cohabitation” definition matters enormously;
• Missing QDRO mechanics — agreeing to a 50/50 split without specifying preparation, fees, or whether gains/losses through the QDRO date are shared;
• Failing to clarify whether support is modifiable — the default in Virginia is that spousal support is modifiable absent express language to the contrary;
• Inadequate refinance and indemnification provisions on jointly held debt;
• Custody language that is too vague to enforce — “reasonable visitation” almost always becomes a fight;
• Failing to update beneficiary designations after the decree is entered (Virginia statute revokes ex-spouse designations in some contexts, but not all);
• Tax provisions that contradict IRS rules — the dependency exemption requires Form 8332, not just contractual language.

Can a PSA Be Changed After Signing?

Generally, no — once signed, a PSA is binding. There are narrow exceptions:

• By mutual written agreement — the parties can amend any term they originally controlled;
• Child support and custody — the court retains jurisdiction to modify these regardless of the PSA, when a material change in circumstances and the child’s best interests warrant;
• Spousal support — modifiable unless the agreement says otherwise; non-modifiable if it does;
• Fraud, duress, or unconscionability — a court can set aside a PSA on these grounds, but the bar is high.

Frequently Asked Questions

Do I need an attorney to sign a PSA?

Not strictly, but yes in practice. A PSA is binding for life. Mistakes are very hard to undo. The cost of having counsel draft or review is almost always a small fraction of the cost of getting it wrong.

What if my spouse won’t sign?

Then the case becomes contested. The court will resolve the disputed issues through pendente lite hearings, discovery, mediation, and ultimately trial. See Contested Divorce.

Can a PSA waive future spousal support?

Yes. A clear waiver of spousal support is generally enforceable in Virginia. The waiver must be explicit; ambiguity defaults to modifiable, awardable support.

What is the difference between a PSA and a Separation Agreement?

In Virginia, the two terms are used interchangeably. A “Separation Agreement” often refers to the document signed during the separation period (before filing); a “Property Settlement Agreement” often refers to the document signed during the divorce. The legal effect is the same once incorporated into the decree.

Will the court approve any PSA we sign?

The court will incorporate the PSA into the final decree if it is properly executed and not unconscionable. The court will independently review child-support and custody provisions to ensure they comply with statutory standards and serve the child’s best interests.

Have a Virginia PSA Drafted or Reviewed

Whether you need a PSA drafted from scratch, a draft from your spouse’s attorney reviewed, or a contested case settled into a workable PSA, the first conversation is confidential. Call 703-385-8722 or request a consultation. See also our Divorce, Uncontested Divorce, and Property Division practice pages.