Overlapping sprites in Unity2D

Hi, I'm making a 2D game with isometric view. I want make sprites overlap depending on their relative position, namely, make a sprite overlap another when it's passing before it, but not when it's passing behind it. These pictures should help understanding what I'm talking about.

What should be the more efficient way to do so? Someone told me I should split sprites, but I'm not sure that's the standard solution.

Thanks in advance!