Das hier ist der Stift, mit dem er das Dokument unterzeichnet hat.

What is the difference between “unterzeichnet” and “unterschrieben”? Does “unterzeichnet” have a more formal and kinda legalistic connotation, such as signing a bill into law or signing off on a policy change, whereas “unterschrieben” refers more to the direct physical act of signing the paper?

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“Unterzeichnen” and “unterschreiben” are listed as synonyms on dict.cc, along with “abzeichnen” and “signieren”. I think “signieren” means something more like signing an autograph rather than signing a legal document, and “abzeichnen” can also mean to draw something, but as far as I know, “unterzeichnen” and “unterschreiben” are pretty much interchangeable.

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Yes and no. The problem with dictionaries is that the translations they give have a broad range of meanings, and not all of them are necessarily synonyms.

“Unterschreiben” and “unterzeichnen” are kind of synonyms, but then they differ slightly in formality. So cazort’s suspicion goes in the right direction.

“Unterzeichnen” is more formal to the point that it’s rare to hear it in casual speech. And by being more formal, yes, it is usually used for contracts and such, and by extension the meaning shifts slightly to the abstract and legalistic.
You can “unterschreiben” anything, for example a package receipt, a debit card payment, etc. but also a purchase agreement for a second hand car. “Unterzeichnen” could technically also be used for this, but the default in normal speech is “unterschreiben”.
On the other hand, a news report might say “der Vertrag wurde unterzeichnet”, but it sounds inappropriate if they were to say “der Vertrag wurde unterschrieben”.

I agree, “signieren” is used for signing autographs, but also for example when an artist puts their
signature in the corner of a painting. It’s a “who made it”-mark.

I haven’t heard “abzeichnen” used for this, but apparently it also means something similar to “signieren”, usually by putting just the initials, it seems (dict.cc says “to initial”).
And then “abzeichnen” also has some other, more common meanings that have nothing to do with signatures. The two default meanings that come to my mind are “to draw a copy” and “to loom” (reflexive “sich abzeichnen”).

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Very small addition to that:

For lawyers and bureaucrats there is a big difference between “unterzeichnen” and “abzeichnen”.
“Unterzeichnen” means that with your signature you take responsibility.
“Abzeichnen” means that you have taken notice of the content, often only with your initials, e.g. if you have to sign each page separately.

Both is in common language “unterschreiben”.

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