2, 3 from the list.
Having watched this scenario unfold 100's of times. Sell or give away the stuff you don't want or need early. I like Joe Rychetnik's way of doing it, where he gathered up all his knives every few years, and divided them into piles after handling. Pile 1 were knives that he still really liked and weren't going anywhere, Pile 2 were knives he couldn't decided on, so they stayed around another few years, and Pile 3 were knives he didn't care for anymore. Those were sold or given away. Every few years he'd do this till the pile was small and manageable.
Selling early saves your estate the 20-40% dealer cut, and allows you to correctly identify them. Big auction houses are horrible at really identifying knives, and even knife specialty dealers can be bad at certain segments of the collecting field. Also if you have ivory, shell, or other now somewhat unpopular handles, figure out what to do with them now. I've seen inheritors contemplate throwing away very expensive knives because "OMG, Ivory? That's illegal now right?". Some dealers don't want the hassle either.
As for what's left? Just keep a log of of what goes where. For the knives that will be sold include - photos of the knife, sheath (this is actually pretty important), and anything that makes it special or unique. Also be honest with prices and update them every few years on the important stuff. It's embarrassing and sometimes kinda hurtful trying explain to someone that their loved one's prized knife isn't worth what it was 30 years ago or tactfully that they had bad taste.