It sounds like this may be the first time that either child has had to process the concept of death. A few website I found indicate that a small child may manifest behavioral problems due to their attempt to comprehend death and what that means to their care and loved ones.
The way a 5 year old understands and reacts to death (and the communication he needs about it) is different than a 7 year's reaction and communication needs. So, you might need to discuss it with each child separately, because talking to both together may give too much information to the 5yo or too generalized info for the 7yo, and result in anger or confusion in both.
Below are some links and portions of the websites with relevant info. They basically say the following points, although a there are also portions on how exactly you might want to age appropriately discuss the concept of death.
1.) They may be reacting to the realization that you could die;
2.) They may be angry that the deceased died and cause instability in their 'world';
3.) They might not show grief as an adult would. A young child might react to the news by acting out or becoming hyperactive.
4.) "Nevertheless, watch for any signs that kids need help coping with a loss. If a child's behavior changes radically — for example, a gregarious and easygoing child becomes angry, withdrawn, or extremely anxious; or goes from having straight A's to D's in school — seek help."
http://www.hospicenet.org/html/talking.html
While the finality of death is not fully understood, a child may realize that death means separation, and separation from parents and the loss of care involved are frightening. Being cared for is a realistic and practical concern, and a child needs to be reassured. Possibly the best way to address such a concern is by asking the child: “Are you worried that I won’t be here to take care of you?” If that is the case, the reassuring and appropriate answer would be something like, “I don’t expect to die for a long time. I expect to be here to take care of you as long as you need me, but if Mommy and Daddy did die, there are lots of people to take care of you. There’s Aunt X and Uncle X or Grandma...”
The death of a close relative also arouses feelings of anger in both adults and children. We feel angry with the person who died for causing us so much pain and sorrow or for leaving us alone to cope with life. We feel angry at the doctors and nurses who could not save our loved one, and we feel angry at ourselves for being unable to prevent the death.
Children are more apt to express their angry feelings openly, especially when they’ve lost someone on whom they depended for love and care. It is difficult enough to hear anger directed toward the dead and even more so when it is expressed in what appears to be selfish concerns. But anger is part of grief, and we can help children by accepting their feelings and by not scolding them if they express anger or fear. Children need to be reassured that they will be cared for.
Some children turn their angers outward, some inward and become depressed, withdrawn, or develop physical symptoms. If this behavior persists over several months, professional help may be needed.
http://www.hospicefoundation.org/griefAndLoss/helpingChil...
Changes in the child's behavior or patterns might be signs that the child is experiencing problems associated with the death. In these instances, it's appropriate to obtain advice from a specialist in child bereavement counseling.
http://kidshealth.org/parent/emotions/feelings/death.html
Getting More Help
As kids learn how to deal with death, they need space, understanding, and patience to grieve in their own way.
They might not show grief as an adult would. A young child might not cry or might react to the news by acting out or becoming hyperactive. A teen might act annoyed and might feel more comfortable confiding in peers. Whatever their reaction, don't take it personally. Remember that learning how to deal with grief is like coping with other physical, mental, and emotional tasks — it's a process.
Nevertheless, watch for any signs that kids need help coping with a loss. If a child's behavior changes radically — for example, a gregarious and easygoing child becomes angry, withdrawn, or extremely anxious; or goes from having straight A's to D's in school — seek help.