When a family pet dies, breaking the news to the kids is very hard. You have probably seen The 6th Day movie and remember the argument Arnold Schwarzenegger's character has with his wife about telling or not telling their daughter that their dog had to be euthanized. The husband says that death is a part of life, and their daughter will have to learn about it sooner or later. The wife wants to spare the girl's feelings and wants the dog cloned. Eventually, she wins the argument.
I am with the husband on this one. I believe honesty is the best policy. You might be tempted to “soften the blow,” so to speak, and tell the child that the kitty “went away,” or something like that. This usually creates expectations of the pet’s return, and more pain later when the child discovers that they had been lied to. Also, it can produce feelings of guilt. The child might think that the pet had left because of them – because they did something wrong.
Younger children do not have understanding of death, when they encounter it they tend to perceive it like some form of sleep. That’s why saying that the pet was “put to sleep” naturally gives them the impression that it is something temporary. I have known parents who would deliberately use the term to avoid explanation of a permanent loss, and then go through long months of beating about the bush when the child kept asking them “where exactly the kitty is sleeping” and “when will it wake up and come home.” You will have to tell the truth sooner or later. My advice is not to prolong the child’s anxiety.
If you believe animals have souls and go to heaven when they die (I do), you can tell that to your children, but make sure they understand that their little friend did not choose to leave them. Also, make sure they do not think that the pet was taken from them because they were bad.