Whenever one of your Sims retires they will receive a heirloom. There are three types (common, uncommon, and rare) of these valuable objects which allow your next generation of Sims to gain access to new and leveled up traits. Some heirlooms grant additional Life Experience, Simoleons and Tickets.
The rarity of the heirloom your retiring Sim will recieve depend on the individual Sim and the length of the Lifetime Happiness bar. Heirlooms are activated by placing them anywhere in the house and tapping on it, once enabled they will start performing. The Lifetime Happiness guage can be filled by achieving life goals and duplicate hierlooms can be sold for Heirloom Points. Tapping the shopping bag icon that is located on the lower right side of the screen will allow you to access the Heirloom Market and your collections.