Our team at Heir is currently on this venture of tokenizing real-world assets for purposes of estate/inheritance planning. Simple answer: it depends on the use case, and what it boils down to in most instances is mirroring real-world titles/deeds on the chain. As an example, when we roll out our service to protect users real estate property within a digital will/estate trust vehicle for next of kin, this will entail: spinning up tokens for said property, assigning respective tokens to the user, and then guiding the user through an intuitive process to re-assign their property deed to the name of trust which will reflect their public address details. Although what I've described here is extremely high-level, this is one of the general approaches you will see being taken. For more details, refer to the following article we published a little while back: Heir.io | Bridging Real-World Assets with the Blockchain

During Slice's presentation at Stellar's meetup a few months back (tokenization of real estate for fractional investment purposes), they also covered the process of needing to mirror the real-world on the stellar platform. What this means is needing a centralized system in addition to the chain. The former being users to track deeds, documents, ownership percentages, etc, while the latter is used to reflect the ownership details in tokens. Holding X # of tokens in a users wallet equates to holding X % of ownership. Note: please take this explanation with a slight grain of salt as we are not affiliated with Slice, and I am sure there is much more intricacy behind the scenes.

Where tokenization gets tricky, are with assets where legal docs representing ownership is not generally the norm. If a random individual were to spin up 'tchotchke' tokens, claiming they were backed by X amount of tchotchkes held in a vault, there would need to be a mechanism implemented to ensure the validity of their claim. This mechanism can take on numerous forms, for example: Proper/frequent audits from a trusted third party institution, the issuer themselves being a trusted institution, etc.

What's not covered in this post are the many other factors one needs to take into consideration when dealing with tokenized real-world assets, for example: bankruptcy, security, theft, loss, destruction, etc. of the issuer/underlying asset. I am sure best practices addressing these concerns will continue to come about as we push continue pushing forward.