New Apple ID for wife

She signs out of the Apple ID on all her devices (Settings > name > Sign Out > Sign out of Store and iCloud) and chooses the option to keep content on the device, if asked, then they will create her own Apple ID and sign into it and turn on her preferred iCloud options again.

Lastly, you will send a Family Share invite to her new ID. https://support.apple.com/en-us/HT201088

You will need to sign out of the Apple ID on her iPhone under Settings->Account (top of settings)->Sign out, Settings->Account->Media & Purchases->Sign Out, Settings->Messages->Send & Receive->Apple ID, and Settings->FaceTime->You can be reached on FaceTime at->Apple ID->Sign out.

You can then create a new Apple ID by following the steps here: link-> How to create a new Apple ID - Apple Support

and use it to sign in to the places described above. link-> Sign in with your Apple ID - Apple Support

Do note, that apps will remain tied to the Apple ID the downloaded them, and will continue to request that Apple ID to update, so you may want to delete the Apps and re-download them with the new Apple ID.

You can use Family Sharing if you want to share purchases and Apple subscriptions however. Link-> Set up Family Sharing - Apple Support

Just follow Shoe and Phil’s processes.

Keep in mind that any short-term pain and inconvenience of the changeover will be FAR MORE than offset by the log-term improvements in security and usability.

Suggest you pay particularly close attention and “think thru” your “disaster recovery strategy” with respect to “trusted phone numbers” …

… so as to still be receive 2FA codes during the “off normal” events when you don’t have access to your trusted devices.

https://support.apple.com/en-us/HT204915

Yes.

Although you might find that you don’t necessarily need to add them as “trusted numbers”

I receive my wife’s 2FA codes in “native iCloud special alert” format. (We share an AppleOne account)

We each have a couple of completely external and secured - but readily accessible - numbers as “trusted” (one SMS, one voice)