Gifting Mutual Fund Shares

It sounds like the bank account is titled something like "Vince or Nancy" meaning that either can write checks on the account, or withdraw money from the bank account via ATMs and the like, while the Vanguard account is titled as "Vince and Nancy" and requires both signatures for making withdrawals or transferring mutual fund shares to your children. There is also the issue of whether Vanguard has a mechanism for transferring ownership of mutual fund shares from one owner to another; mutual fund shares are not like shares of common stocks, where the number of shares is fixed. In contrast, (open-ended) mutual fund shares are created when someone buys into the fund by sending cash to the fund manager with a request to invest the money into the fund, and mutual fund shares are destroyed when an investor in the mutual fund makes a cash withdrawal by "selling" the shares back to the mutual fund. So, what you want to do is effectively make a cash withdrawal from your joint mutual fund account by selling the shares back to the mutual fund, and then gift the cash (in equal shares) to your children, who in turn use the cash to buy brand-new just-created shares in the same mutual fund in their own name, either creating new accounts in Vanguard in the process, or adding to their existing Vanguard accounts. If the children are minors, they might have already have custodial accounts at Vanguard with you as guardian, or you might be creating new accounts for them at Vanguard in this process. Vanguard will, of course, not do any actual buying and selling of the assets under management (the underlying stocks, bonds etc in which the mutual fund is investing its shareholders' money) but simply "destroy" the shares that you own, and "create" the shares that your children will be owning.

There are some things you should keep in mind while doing all this. If you and your wife max out your annual $15K per person exclusion from gift tax on gifts to your children in the way you propose to do, then you should not already have given them gifts for their birthdays/graduations/anniversaries etc or give them any gifts for such occasions (including for Christmas) during the rest of the year. Doing so will put you over the $15K limit, and while it is unlikely that the IRS will notice, or come after you for not filing a gift tax return, it is against the rules of money.SE to suggest that breaking the law is OK. With regard to gift-splitting, you are technically already splitting the gifts; even though your wife is signing the two $15K checks from your joint account, technically it is $7.5K to each child from you and $7.5K to each child from your wife. Ditto the "shares"that you propose "transfer"to you children; it is $7.5K from each of you and your wife to each of your children, and you both are at the limit and don't need to file gift tax returns at all for these transactions. But if you do all this, don't forget to change your names to Mr and Mrs Scrooge McDuck come Christmas time! Or leave some room at the top in your giving, e.g. give only $14K each, leaving you room to celebrate birthdays and Christmas etc with gifts without worrying about gift tax returns and the like.