I have always found that a simple, sincere "I am so sorry" is the best thing I can say. If the person wants it I also give them a hug.

I had some friends who lost their little girl at 7 weeks to SIDS. While many people asked how the mother was, no one asked the dad how he was doing. The day I did this he broke down and cried. When he calmed he told me that I was the only person who wanted to know how HE was doing. I learned then and there that it is so important to ask the dad how he is doing also. The men grieve the loss of their baby too.

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SamIAm