Sorry for your family's loss.
Typically, schools do make adjustments to the FAFSA based on special circumstances such as these. I'm surprised to hear that this is not the case. Since the FAFSA is based on the prior year's financials, it may be that your stepson will need to file the FAFSA as usual then appeal for more aid based on these circumstances.
The best way of resolving issues with the financial aid office is to make an appointment to sit down with them in person (if you haven't yet). Sometimes talking face-to-face can be more helpful.
For information on appealing a financial aid offer, you may want to read Appealing a Financial Aid Offer – Can it be Done?