The children are grown I presume?
Wow that is a toughy!
I know for me I find it easy to just be up front with my kids. I have no issue with letting them know-but that's somewhat different....
My oldest daughter knows I'm poly by nature (she just turned 18) and she knows I've been in a functioning poly family pretty much her whole life in one fashion or another.
My stepson-I dont' know what he knows/understands. There are some difficulties in knowing that because of psychological issues he has.
My youngest are 9 years and 2 years and they are clueless about SEX but know perfectly well that we have a 4 adult household and that we all love and care for one another..... it's been that way their whole lives.
However-"coming out" as to the EXTENT of our relationship... my hubby is very private on that note and so we haven't TOLD THEM (or anyone else) at this point. But myself personally tend toward the blunt.
I think it's a bit more touchy for your situation with the death of one of the core people in your group... I think I would ease into it something like Redpepper and mono described in dealing with the parents....
Please keep us posted, I'm interested to know what you come up with and how it works as we will eventually have family to integrate into our situation as well!
"Love As Thou Wilt"