MCC has an option to adopt neglected children. If it doesn't have any children to adopt out it, it will also create children to be adopted by NPC families. Babies can also be adopted (I have it set for baby to teen). Neglected babies are taken and placed into a NPC family, so it also helps if you miss a feeding, and your baby gets whisked away.
In my game Nancy had a twins with Mr. Kim, at the end of her adult stage (i have ageing with pregnancy enabled) thanks to a certain mod that cant be named.
Anyways, when they where toddlers she died of old age. Mr. Kim was also dead because he was already an elder, so he couldn't get toddlers. Geoffrey was in an old folks home, so he couldn't take them. So the twins were automatically adopted by Malcolm, as the twins and Malcolm share the same last name.
Edit: They do retrain their family status, say grandmaw gets the children, they will still be labeled as grandchildren. Same with Aunts/Uncles/Parents
Ex: Malcolm is still considered their brother.
