Loot BEFORE sitting
The hitboxes for loot on benches overlap significantly and causes a lot of confusion. A decent solution is that the loot's hitbox takes priority over the bench, rather than having them co-exist equally. The result would require looting before sitting on a bench. There will be edge cases where you can't sit to Rest between a full inventory and a bench with loot, but I think that's a worthy trade-off for the annoyance of being unable to loot without sitting, standing, sitting, etc.