I have three little monsters and I brew with them around. You do need to be careful around hot things, but that's about it. In my case, they know what beer tastes like, and have decided that they don't like it at all (so far anyway), so they have virtually zero interest in my hobby except they occasionally like to take a peek at the mash or the boil to see what it looks like, but that's all. Otherwise they just leave me alone to do my thing because that's daddy's thing and it's not really too fun for them.
I agree with others' sentiments that in most states, it is perfectly legal to brew, but you do need to find out your state's laws, to confirm that they've got nothing on you or your buddy. Then, assuming it's legal, make it clear in court that what you are doing is perfectly legal and therefore can't be held against you. The "investigator" should know better -- are they getting some kind of search warrant for this?? If not, you could refuse to let the investigator in, and counter that their basis for any such warrant would be flawed.
Now on the other hand, if homebrewing is not legal in your state, you could have a slight problem -- Better get rid of the equipment and all homebrew kegs/bottles immediately. If this is the case, the investigator is basically giving you a free chance to clean up before they come over (because maybe they're really on your side?). But as soon as the investigator leaves, you could probably sneak all the stuff back in with no one being the wiser.
In reality, regardless of legality, there is really nothing bad about homebrewing around kids as long as you're not alcoholics and you're not serving it to children. Anyway, the feds say we can brew 200 gallons per household per year, which in my eyes basically implies that as long as you're under that, you're legally not drunks either. Right?!