Our five and a half year old daughter died from an asthma attack in May last year. Our little boy was nineteen months old at the time. From the time Sian passed away, we have told Dane that Sian got very sick and her heart stopped and she died (our SIDS counsellor said it's very important to use the word 'died'). We have said that she died and went to heaven and that God is looking after her. We have Sian's ashes in our garden and Dane goes out to "Bup's Garden" (he's always called her Bup). Eventually we will need to explain cremation to him, but we'll do that when he asks more questions.
Just today I went to a funeral and I told Dane that the man had died and gone to heaven, and he said to me, "Peter in heaven, Bup, God". I think he understood that Peter was now with Sian. It's such a hard thing to explain to a little person.