First, let me get the disclaimer out of the way the best way for the Scouts to pass any knife is to lay it down and let the other person pick it up. However, if it can't be laid down they need to know how to pass a non-folding blade properly. Of course if the knife can fold, then it is always past when folded.
As you can see in the first picture, you hold the blade of the knife securely in your hand with the blade facing out of your palm. This way if the knife was to slip or be pulled out of your hand - you won't be cut. The other person takes hold of the handle, who gently grasps it and says “thank you”. The words “thank you” is the clue to the person holding the blade that they have a hold of it and are ready for you to let go.
When I am teaching this skill I personally use a wooden knife that I carved while on summer camp staff. This creates a safer way to teach the boys. If they hold it wrong, let it slip, drop it, etc – there is no harm done.
How do you teach holding and passing of a knife?