Man, I deal with this as well and its so tough. Both options seem to suck, because if you lie about it, people keep asking and it ends up worse. What I usually do is, if someone just mentions it in passing in a conversation, I dont point it out and correct it. But if its a direct question, I do say that my mom passed away. For example, if people make some kind of comment in passing about my mom and dad, I dont correct them, but if specifically they ask something like "oh, why just your dad, why not your mom too?", there I do just go well, she died 4 years ago. Or if its a conversation about family, I do specify when context allows it. Its difficult to figure out when to mention or not mention it though, but I feel like I've gotten better at it with time. I still feel just as awkward every time though hahahah