In a large mixing bowl beat softened cream cheese, powdered sugar, and vanilla. Beat with hand mixer until the mixture is smooth and no lumps of cream cheese remain. Then mix in the crumbled Christmas tree cakes. You may need to stop and scrape down the sides of the bowl. Add a tablespoon or two of milk as needed to thin the dip so it is easier to mix.

Next fold in whipped topping and gently mix the dip together.

Decorate the top of the dip with extra holiday sprinkles right before serving. Serve with cookies, pretzels, animal crackers, or fruit for dipping.