I also work in a nursing home, and believe it or not, I'm on the dementia wing today. I even have an Alzheimer's patient speaking to me off and on right now. She often asks questions. The thing to remember about reality is that none of us can be sure what it truly is. Most of us agree on a similar reality, but all of us perceive the world in a unique way, and some construct a very different reality, often changing based on what limited information they receive or remember or perceive. It can be good to reorient schizophrenics to reality if hallucinations are present, as it can help dispel them and their negative effects. But a dementia patient is different. They will not benefit from such reorientation in the same way. First off, they are not hallucinating. Their perceptions are not necessarily damaging. Repeatedly hurting them with reminders of something sad like the loss of a loved one will have no benefit at all. They will be sad to learn this, and then forget, thus never going through the grieving process and coping with the loss. They simply are repeatedly shocked to learn of the loved one's death. It is better to be as truthful as possible, but not divulge too much information. Saying, "I don't know" or "They aren't here now" are good answers. It might not hurt, considering your religious beliefs, to say that they will see them later. If necessary, less truthful statements might be necessary. Remember, you are not dealing with our reality. You are dealing with someone with a fractured, unstable, changing reality. You must address their situation in their reality, not in yours.

http://allnurses.com/geriatric-nurses-ltc/therapeutic-lying-dementia-754397.html