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, sallallaahu ‘alayhi wa sallam, is His Slave and Messenger.
The sons’ children – sons or daughters - are among the heirs and they inherit their grandfather and grandmother if their father died before his parents. However, if there were other sons of the grandfather still alive, then the son’s children will not be entitled to inheritance. The rationale behind this is that the direct son is worthier of his parents’ money than their grandchildren because he is closer to them. In a Hadeeth on the authority of Ibn ‘Abbaas the Prophet, sallallaahu ‘alayhi wa sallam, said: “Give Faraa’idh (the shares of inheritance that are prescribed in the Quran) to those who are entitled to receive them. Then whatever remains should be given to the closest male relative of the deceased…” [Al-Bukhari and Muslim]
With regard to the children of the daughter, they are not counted among the heirs of their grandparents; rather they are relatives from the female side of the deceased.
For further information, see Fataawa 83201, 90126 and 88371.