Musannaf Ibn Abi Shayba 26:434

'Abd al-A'la narrated to us, from Hisham, from al-Hasan, that he said: If a Jewish or Christian woman dies while married to a Muslim man, and he has young children from her, then the child is with his Muslim father. If they die while they are young, then their inheritance belongs to their Muslim father. Their mother’s family has nothing of the inheritance as long as they are young.