On g2g we are not to discuss the genealogy of living persons - including our own family unless we don't identify them in a way that risks that privacy - but there is no restriction on just mentioning them.
I refer to "my daughter", or "my son", without naming them. I may also refer to "cousin Derek", because he is a member, as are "cousin Rob", and "cousin Janelle". (Real names, not made up. They are all members, and thus have visible profiles.)
With a number of folk making an issue of not even mentioning the living (which is not what the rules say), I edited my late husband's profile and removed the names of his siblings (names which are freely available online in obituaries of their parents and siblings), which leaves the bio reading a little - to me - strangely.
I think we need to balance what the rules say, with what the concerns are regards privacy laws in different countries - because WT is working hard to accommodate the European laws as well as the American ones. In some places you cannot even take a DNA test, because of the privacy rules.
IF you are attaching the profiles of living people to profiles of deceased people, I don't think there is any need to name them in the biography. (Better to be safe than sorry.) I do not believe there is any way the system would automatically update text in the biography, from "private" to the name. The text would still say "private", although the link would no longer open a black-locked profile, but one that is visible to the colour of the lock.
(I am not sure if I am explaining anything that answers what you are asking, but I tried.)