A Family settlement agreement is a form of agreement that helps in solving the disputes that may arise in a family. The most common use of this agreement is for avoiding the disputes that may arise at the time of devolution of family property. Through this agreement, the heirs and the beneficiaries mutually assign the rights with respect to the property among themselves. The agreement is mainly used to overcome any dispute that may be caused by a will or testament that has not been drafted well. Drafting this agreement acts as an out of court settlement and helps in avoiding lengthy court proceedings.

The Indian law, however, does not provide a separate statutory rule for the family settlement agreement. The definition of family settlement agreement has been provided under English law. It has been defined as an agreement that divides the property in a way that benefits all the heirs.

There have been a series of cases where various courts have outlined their view on the concept of family settlement agreements. The main rationale behind supporting the family settlement agreement has been explained by the Apex court in the case of S. Shanmugam Pillai v. K. Shanmugam Pillai (1973) 2 SCC 312). In this case, the apex court observed that if the family has amicably settled the dispute then the courts will be reluctant to interfere with the same. The legality of the family settlement agreement was upheld in 1911 by the Privy Council in the case of Lal v. Kunwar Gobind Krishna Narain (1911) 13 BOMLR 427, where the council observed that it is the duty of the court to uphold and give complete effect to such arrangements.

Although there is no set format for a family settlement agreement it has been observed by the court in the case of Tek Bahadur v. Debi Singh AIR 1966 SC 292, that even oral family settlements are said to be valid. Further the court in the same case, also observed that the agreement has to be registered if it is in writing. 

The registration of the family settlement agreement is not compulsory; however, the Supreme Court said that it is mandatory to get the agreement registered under section 17 of the Registration Act if it creates any new property rights. 

The essential characteristic of a valid family agreement are listed below: 

1. The settlement must be made with bonafide intentions i.e. the distribution in the agreement must be fair to all
2. There should be free consent of the parties 
3. The settlement must be made with the parties that are near in relations
4. There should be an existing antecedent title 
5. There should be a clear mention that the agreement will supersede the will or the testament. This is to avoid any dispute or confusion later. 

This Article Does Not Intend To Hurt The Sentiments Of Any Individual Community, Sect, Or Religion Etcetera. This Article Is Based Purely On The Authors Personal Views And Opinions In The Exercise Of The Fundamental Right Guaranteed Under Article 19(1)(A) And Other Related Laws Being Force In India, For The Time Being.