The settlement was a contrast to the instructions spelled out in Brown's will and trust after his death on Christmas Day 2006. Some of Brown's adult children contested the bequest, claiming their father's estate was mismanaged by trustees.
"I find that the settlement is just and reasonable and provides a just and reasonable result for the charitable beneficiaries," Judge Jack Early wrote. "From the perspective of the charitable beneficiaries, the risks of not approving the settlement agreement are substantial."
The exact value of Brown's assets has not been made public. However, during numerous court hearings since the Godfather of Soul's death, there have been claims of unpaid debts, inadequate accounting and misappropriated money.
Some of the soul singer's possessions were auctioned for $850,000, partly to pay debt. Attorneys have said the soul singer's accounts have little money in them. The future income - from movies, royalties and the sale of Brown's likeness - is what's really at stake, attorneys have said.
The settlement establishes that Tomi Rae Hynie Brown is the surviving spouse of the Godfather of Soul and her son is James Brown's child. James Brown II will not be required to take a DNA test.
"I am so relieved and happy that the court has approved this settlement," Brown's widow said in a statement to the AP. "I want to be able to work with the trustees and other Brown family members to promote James Brown's legacy. My son James and I are grateful to the judge and hope this nightmare is finally over."
For more than three years, as thousands attended public memorial services, the legal rifts surrounding his estate formed. It even took a couple of months for Brown to be buried, his body at one point resting in a sealed gold casket inside his South Carolina home.
A will filed in Aiken County on Jan. 18, 2007, called for many of Brown's personal possessions - clothes, jewelry, boats and automobiles - to be divided among six of his adult children. But the legitimacy of the will and trust was quickly called into question.
Louis Levenson, an attorney for Brown's adult children, said he had not yet reviewed the judge's order.
The judge also wrote that Brown's relatives will create a museum or other memorial burial place for the late singer. Brown was interred March 10, 2007, at the Beech Island home of one of his daughters.
Associated Press writer Meg Kinnard contributed to this report.
By Katrina A. Goggins