Generally people use standard physics-enabled objects. In Unity, this is a separate Rigid Body; In Unreal an Actor with physics and collisions enabled, I think Unreal uses the existing meshes of the Actor object. (I haven't used Unreal much, so there may be multiple was to do this.) Of course, once you add collisions to hands, this makes picking things up by grabbing tricky as the collision physics push the object away at the same time you are trying to grab it. It can be done with care, but is difficult to do really, really well.