Do the dead know what happened to their family whatever its good or bad?

All perfect praise be to Allaah, The Lord of the Worlds. I testify that there is none worthy of worship except Allaah, and that Muhammad is His slave and Messenger.

The dead could learn about the news of the living people and what happens to them whether or not the living are members of their family. This could be by the soul of the dead asking those who died after him/her. They would answer according to what they know about the circumstances of the people they were asked about.

Abu Hurayrah narrated that the Prophet   said in a long Hadeeth regarding when the soul of the believer is taken away from their body: "…. Then they (the Angels) take him to the souls of the dead believers -i.e. those who died before him/her.  I (ensure you that) they will be happier with this newly arrived soul than one of you when meeting his beloved one after a trip.  They (start) asking him/her: "What happened to such and such person…?"  Then they would say: 'Leave him, he is still involved in the sorrows of the worldly life".  They would ask: "Has he not come to you? They would reply: "He was taken to his abyss, the Hellfire." [Al-Nasaa'i, Al-Haakim and Al- Albaani]

Allaah Knows best.