I would first collect functional requirements and identify database objects and attributes, then I would use database modelling tools, including ErWin, ERStudio, or even Accesss, using the Relationships function to create the schema. But ErWIn and ERStudio are better since they work with many RDBMS, including Oracle, Postgres, Sybase, SQL Server, DB2, etc. So, after creating the schema with either of the "ER" tools, you can automatically create a script or even connect to the database and create the database, including all its structures, including triggers, indexes, referential integrity, etc.
Don't use Word, it's a waste of time and inefficient.
Also, RDBMS clients, including SQL Server Enterprise Manager and Toad (for Oracle) have modeling tools built in that you can create relationships and print them for presentations.
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Buh Bye!
Cheers,
Me