Slow and gentle.
I would start with explaining to him (you and hubby together) that the two of you feel like she is part of your family. That you both love and care for her and feel that she loves and cares for ALL OF YOU as well.
If that goes well then you can easily move forward to talking about how we can choose our own families and use that to lead into the fact that she's having a baby and this child will be part of your family too as his brother/sister.
"Love As Thou Wilt"