Write Them Down
Hidden in the embellishments of your family's story are probably at least a few grains of truth. Ask all of your relatives about the famous legend, and write down everything they tell you - no matter how insignificant it may seem. Compare the different versions, looking for inconsistencies, as they may indicate those parts are less likely to be rooted in fact.
Ask for Backup
Ask your relatives if they know of any items or records which may help document the family story. It doesn't often happen, but sometimes if the story has been carefully handed down from generation to generation, then other items may have been preserved as well.
Consider the Source
Is the person telling the story someone who was in a position to have experienced the event first-hand? If not, ask them who they got the story from and attempt to work your way back to the original source. Is this relative known as the storyteller in the family? Often "good" storytellers are more likely to embellish a story so as to elicit a favorable response.
Bone Up on History
Spend some time reading about the history of the time, place or person which relates to your family's story or legend. Background historical knowledge may help you prove or disprove the legend. It's unlikely that your great, great Grandfather was a Cherokee, for example, if he lived in Michigan in 1850.
Test Your DNA
While your genes may not have all the answers, a DNA test may be able to help you prove or disprove a family legend. DNA can help you determine if you descend from a particular ethnic group, your family came from a particular region, or you share a common ancestor with a particular person.
Common Genealogy Myths & LegendsThe Three Brothers Myth
It's always three brothers. Brothers who immigrated to America, and then headed out in different directions. Never more or less than three, and never sisters either. This is one of the favorite of all genealogy legends, and one that very rarely turns out to be true.
The Cherokee Indian Princess Story
Native American ancestry is a fairly common family story, and one which may actually turn out to be true. But there really isn't such a thing as a Cherokee princess, and isn't it funny that it is almost never a Navaho, Apache, Sioux or Hopi princess?
Our Name Was Changed at Ellis Island
This is one of the most common myths found in American family history, but it actually almost never happened. Passenger lists were actually created at the port of departure, where the native names were easily understood. It's very likely the family name may have been changed at some point, but it probably didn't happen at Ellis Island.
Family Inheritance Myth
There are a lot of variations on this popular family story, but very rarely do they turn out to be true. Some of these myths have their roots in the numerous inheritance scams of the nineteenth and early twentieth century, while others may reflect a hope or belief that the family is related to royalty or a famous (rich) family by the same name. Unfortunately, the family inheritance story is often used by scammers to trick people out of their money.