So, I think this bug started happening after the last update for Life and Death. I always have Neighborhood Stories off in the main settings. I noticed my game lagging a bit recently, and decided ...
Ideas
I'm having this exact problem. I turned off the neighborhood stories because it's just not my jam and I still have sims moving in, merging with other families, having babies, etc. I even started a new save and turned on neighborhood stories just to make sure all the stories were disabled before turning it off again but it didn't help. The moment I un-favorite a family, chaos reigns.
I even double checked all my mods and made sure they're up to date but I'm still having the problem. I'm not sure when it started because I took a bit of a break from Sims but now I don't really want to play if it's just going to alter families like that.