Thank you for your support also doberluv. Maybe you could suggest why this would become an issue now rather than quite some time ago?
Most behavior problems like this are caused by a dog not having a clear enough picture of where he stands in the scheme of the social order. They are designed to operate within a heirarchy, albeit domestic dogs aren't quite like wolves and we are not exactly like a pack. It is something like that.
Sometimes people are sure their dogs know they're in charge because they see no challenges or problems from their dog. It can go along just fine as long as everything is going along smoothly for the dog. But when one thing comes up that isn't what he wants, is important enough to him to do something about, he suddenly reacts in a way that a subordinate animal does not, but a middle ranking one does. He challenges. Middle ranking animals will challenge other middle ranking animals, but won't challenge the leader. If the dog doesn't have an absolutely clear picture that there is a strong leader, he will take it upon himself to make these decisions.
Your child presented to the dog something not approved of by the dog and he took it into his own hands to deal with the situation in his own way, rather than leaving it up to you. That is because he saw himself as right up there, in charge, since to him, you are a middle rank....where as he should be leaving any and all decisions like that (how to handle the child getting his stuff) up to you. The leader handles all those kinds of decisions. A subordinate does not.
Now, I could have this wrong because I didn't see what happened exactly. Or I might have it wrong anyhow. These are my suspicions.
Sometimes too, dogs view children as prey and their hunting instincts kick in. This is not very common, I don't think in a family setting, especially if the child wasn't running or moving. But it is a possibility. It does sound like a guarding issue....guarding his toy. But again, resource guarding is a leadership conflict in the dog. Sure, he may not view a child as a leader, but within the family....again, he should be knowing his place enough to know that it is you who makes those decisions and solves those problems of his.
I am not wanting to sound bashing or critical. So please don't take it that way. This kind of thing can sneak up on people very, very easily. You are not alone. When dogs whine for attention and we turn and acknoweldge them, we are reacting to their acting. When they want things, push at us for affection all the time etc....and we react, they are getting a message that they are calling the shots and we are following along with them. They are acting. We are reacting. This can contribute to a lack of leadership of our dogs.
Some people make the mistake of thinking that harshness and sterness is what makes a good strong leader. It does not. Controlling resources and decision making is part of what makes a leader to a dog. Leaders act. Followers react.
I had a dog when I had babies and toddlers, a GSD...never had an inkling of anything like that from him. I even had daycare at that time. The GSD licked the babies, was gentle and couldn't care less if someone took something, stepped on his toe....absolutely trustworthy. He even would shoulder them closer to the house when we were all outside playing. That protective, herding instinct kicked in. Went sledding with them, never chased or hurt them. He loved the kids. He knew somehow that there was no way on earth that he was in a position to make decisions like that about his stuff or anything else.
So, something went wrong here. It may not be anything that you did. It could be a temperament issue. It's impossible to say for sure. I hope someone can straighten him out....someone without kids so less risky. I really don't think he should be put down. I think he could very easily be straightened out. He just needs to be shown where he belongs in his family. With some dogs, it's not as easy as others, but someone very experienced could fix him up. I just am really quite sure of it.
I sure am sorry about this. And don't blame yourself. This is something that sneaks up on people a lot. It can be turned around. But I think it needs a very experienced dog trainer/handler to work with. And you can't risk your kids safety.
I wish you the best.