Zakah money is obligatory upon all the money that these orphans have, whether it is that collected by the benevolent people or that which they inherited from their father; this includes any money and commercial commodities. If the share of each of them reaches the Nisab (the minimum amount on which Zakah is due) and they possess it for one year.
After you had repaid the debts of your late cousin - if he had any debts and mentioned them in his will - if there was anything left, you should have divided his property, whether it was that which he inherited from his father or that which he himself earned, into eight portions. You should have given his wife one of the eight portions and the remaining seven portions should have been given to the three sons and two daughters, with the boys getting the shares of two females. The departed man's maternal half-sister does not have a right to anything, (Part No. 14; Page No. 228) because her half-brother had children. The departed man's paternal cousin also does not have a right to anything, because he is one of the relatives who does not have a right to inheritance in this case.
If you think that half of the money that you spend from the orphan's inheritance is close to their expenditure, there is no harm. You should do your utmost to be fair in this concern. Allah (Glorified be He) says:
And they ask you concerning orphans. Say: “The best thing is to work honestly in their property, and if you mix your affairs with theirs, then they are your brothers. And Allâh knows him who means mischief from him who means good.
May Allah grant us success. May peace and blessings be upon our Prophet Muhammad, his family, and Companions.