This paper presents a methodology for designing proper nesting structures of user-defined types in object-relational databases. Briefly, we envision that users model a real-world application by using the EER model, which results in an EER schema. Our algorithm then uses the theory we developed for nested relations to generate scheme trees from the EER schema. We shall prove that the resulting scheme trees have exactly the same information content as the EER schema, and the scheme-tree instances over the resulting scheme trees do not store information redundantly. Finally, the scheme trees are transformed to Oracle Database 10 g nested object types for implementation. The algorithm in this paper forms the core of a computerized object-relational database design tool we shall develop in the future.