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Originally Posted by Patrick G.
What are the recommended steps for ensuring that the old Kindle 2 is no longer associated to my wife's account (i.e. what do I need to do before shipping it)?
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After you've de-registered it from the Amazon website, you might want to nuke all the lingering settings and such by doing a Reset to Factory Defaults (via Home/Menu, Settings/Menu). This will completely wipe anything left behind such as search indexes and any other stuff that might be missed by doing a simple delete of the visible files.
As for sharing books, your wife and respective parents can keep separate accounts for buying, but temporarily re-register their Kindles to the account with the books they'd like to read, just long enough to download a copy encrypted for their particular Kindles. This allows family members to swap books but maintain privacy and separate book-buying budgets.
Also, welcome to MobileRead!