"Have you heard of American Girl? That's all they want. They actually went through the catalog, and that's all that's on their lists," the actress, 39, tells PEOPLE of daughters Sam, 6, and Lola, 5.
Attending this week's Alice & Olivia's toy drive in West Hollywood, Richards added that she and the girls went with an artificial Christmas tree this year – for the best possible reasons.
"I'm afraid that we're going to start a fire with our lights!" she said. "That's the God's honest truth. It's too dry in California, and I don't want to start a forest fire."
Though Sam and Lola will be busy with their dolls this season, they will also surely find time for another emerging passion – reading.
"We're into the Fancy Nancy series right now, and the Junie B. series. My girls pick them out," Richards says. "I love when they come home with that big bag of books and they're so excited to read these amazing books."