Step 1: Preparation.
Hold your left hand with your fingers together and pointing to the right, thumb uppermost.
Fold your thumb ninety degrees at the knuckle so that it is pointing at your body.
Bend you right thumb at ninety degrees as well.
Lay your right thumb along the top of your left index finger, with both bent knuckles touching each other.
Roll right index finger around the two knuckles to hide the join.
Step 2: Execution
I quickly get ready (with practice, it will take only a moment to prepare, and it can be hidden in plain view simply by doing it quickly. whilst moving your hands together), then fake a little strain on the joint, as if I was pulling and twisting the joint. I allow my thumb to move slightly in an un-natural direction, twisting and bending.
Then, with a dramatic little grunt or gasp and a little jolt, the thumb comes loose. Look! I can slide it up and down along beside my index finger, how gross is that?!?
Don't indulge yourself!
If you leave your thumb "disconnected" for more than a moment, you risk the trick being spotted. Quickly "replace" your thumb, hiding the switch from two thumbs to one in a flourish and waving of digits, as if you are testing the joint.
The trick works best, obviously, with small children. If nobody else you know does the trick, though, it can work on kids into their early teens, especially if they have just been telling each other spooky stories...