Best way to implement RPG Inventory System (w/ Sized Items)

First, by no means am I looking for someone to write code for me :) I can do that. But I'm sitting here racking my brain trying to figure out how best to implement this system. Specifically, I have a grid for items the character can hold, 12x8 squares. Each item will take up at least 1x1, but could take up more. (The sword, in the example, takes up 1x5 squares).

This is iOS, so when the player drags the sword and lets go over a new spot, the sword only goes into the new spot if there is space in the grid.

I'm thinking that while the player is holding the item (touching-dragging), the underlying grids will turn green or red if it's available/taken. And if all 5 are green, then the item can be dropped.

The place I'm getting stuck: I know I can count the grid and if it's taken or not. And I know I can tell each item how much space it takes up. But how would I connect the two -- If the player is touching/moving from the bottom of the sword, the grids below need to know which part of the sword is above them.

I'm thinking perhaps a unique collider for each "part" of the sword? So 1x5 sword would have 5 evenly spaced colliders, and when they go over the grid, the grid can light up etc?

Any thoughts? I've included a screenshot of the GUI so you can get an idea. (It's based on Might & Magic 6-8 system)

Thanks!