The Fraud Triangle in Divorce Cases

The fraud triangle is a popular tool to help understand why people commit fraud. It consists of 3 components: opportunity, incentive, and rationalization.

At Accounting & Valuation LLC, this is how we see the fraud triangle play out in divorce 👇

Opportunity – Typically one party has control over the finances, with the other spouse not knowing the financial details. Also, to the extent the party is a business owner, that provides additional opportunity to divert income and assets.

Incentive – The incentive for the monied spouse is to pay the least, have the lowest income and lowest value of assets possible. Shielding your assets from getting split in half and paying less support is usually enough incentive for people to try and defraud the divorce process.

Rationalization – We’ve heard it all. “I built this business, and they didn’t do anything!”, “they cheated”, “the economy!”.

Knowing the fraud triangle of a case = knowing where to focus