Two parties can memorialize any agreement in writing. You can use simple terms in plain English to state the terms of your agreement. You should include the date of the agreement, the parties, and a brief statement of the purpose of the agreement and any amount paid. You should both sign the agreement. If you have reason to believe the other person may deny signing the agreement later, you may want to sign the document in front of a notary.
You mention an IOU in your question, but I assume you mean a promissory note. This is a legal promise to pay someone. You should check in your state for the requirements of a valid promissory note because each state is different, but it general it should have the maker's name (the person who is promising to pay), the person who is receiving the money, the amount to be paid, the interest rate to be paid, and the terms of repayment.
You can proceed by simply having a simple settlement agreement drawn up or you could ask the party to provide you with a promissory note. A promissory note is a bit stronger in that, if properly drafted, it is more difficult to dispute.
The Revised Code of Washington chapter you want to review is RCW 62A.3, which is attached below. This section of the code is extremely difficult to follow, and as such, I would suggest that you contact an attorney to have a Note drawn up, if you intend to proceed in that manner.