Amber calls Rick to update him on Deacon's troubles with his stepfather. He insists on coming over but she won't allow it. Deacon returns and thanks Amber for her support and all that she has done to help him. He claims that he cares about her and considers her an important part of her life. He than hands her a copy of some custody papers which will transfer his custody to her after she lives with him for 4 months. Upset by the terms, Amber asserts that she loves Rick and wants to marry him. Deacon tells her that she has to choose. Frolicking in bed together, Brooke admits to Thorne that she's happy that his brother and Taylor are renewing their wedding vows. He's surprised by her admission but she claims that the change in her attitude is due to him. After Catherine states that she thought they had Steffy and explains how she fell asleep but was awakened by the listing of the ship. She found one of the twins on the couch where she had left the baby but since Steffy was gone, thought that she was with them. Taylor screams for the captain to stop the boat and then starts looking for her daughter in the murky blackness that surrounds the ship.
Amber and Rick bring the document Deacon's attorney produced to Eric and Jonathan. The attorney reads through it and advises them that there really isn't much they can do since Deacon has custody of his son. When Rick claims that Deacon is using Little Eric to go after Amber, Jonathan advises them that they can take Deacon to court and try to fight for custody but he knows that, in the end, Deacon will still have custody. Though Eric takes the teens' side, Jonathan urges them to accept the agreement in hopes that Deacon may give up the baby sooner rather than wait the entire four months. Meanwhile, Deacon starts cleaning up his apartment, surprising Alexandra from downstairs. She is surprised to see the change in him but he states that he wants to prove that he can be a good father. When he lights up yet another cigarette, Alexandra reminds him that he'll have to smoke up on the roof and then apologizes for reminding him of Carmen's death. Rick and Amber arrive with Little Eric and the document. After Deacon agrees to Rick's demand that he be allowed time with the baby, Amber signs the document. Ridge and Taylor return to their hotel room to wait for word. The police arrive and question them about Steffy's disappearance during the boat trouble. When the police get a call about something being found, Taylor is encouraged but then panics when a crate is brought in instead of her daughter.
Eric and Stephanie received a phone call from Catherine, Ridge and Taylor's nanny, filling them in on the situation in St. Thomas. Eric took the call and shortly thereafter, Stephanie entered the room talking about how she missed Ridge, Taylor and the kids. She suggested calling them in St. Thomas to say hello. Eric had the difficult job of informing Stephanie that little Steffy had fallen overboard and although the coast guard had been looking for her for hours, they had yet to find her. Stephanie was shocked and couldn't understand how this could have happened. She wanted to go down there right away and start their own search but Eric told her that they needed to stay strong for Ridge and Taylor in case the worst happened.
Morgan entered Brooke's office at Forrester Creations and announced that she was coming back to work. Brooke thought Morgan was joking and reminded her that Stephanie and Eric had fired her. Morgan reminded Brooke that she had an ironclad contract with Forrester and unless the company wanted to be sued, they had better not protest her working there. Brooke couldn't believe that Morgan would even want to come back to work there. She noticed that Morgan appeared different somehow and questioned her about the change. Morgan told her that she had taken control of her life and found a reason to go on living. She claimed that she wasn't about to let the Forresters run her out of town. Brooke reminded Morgan that they had given her a more than adequate severance pay, but Morgan took the check out of her purse and returned it to Brooke. Brooke asked if this was about Ridge and wondered if Morgan was still in love with him. Morgan replied that this was no longer about Ridge. She told Brooke that her name was on the Forrester collection and that no one would hire her while her name was on another company's label. Since Brooke didn't have the option of pulling the line, because it was already in stores everywhere, she didn't know what more to say to Morgan. Morgan walked out of Brooke's office telling her that she would be back to work tomorrow morning.
The coast guard and police officer in St. Thomas showed Ridge and Taylor a hat that they had recovered from the ocean. Taylor admitted that it was Steffy's but that she hadn't been wearing it at the time they lost her. Then the coast guard showed them a torn up life jacket that matched the one Steffy was wearing and explained that it was torn from a shark attack. Taylor was devastated. She claimed that they couldn't prove that was Steffy's life jacket. The coast guard said the code on it matched the one that their daughter was wearing. Taylor let out an anguished, heart wrenching cry and yelled at them to continue searching for her daughter. She said that she knew her baby wasn't dead and insisted that they go on looking. Ridge tried to comfort his wife. Once the coast guard showed the couple the T-shirt that they found, which was also torn in the same manner as the life jacket, Ridge and Taylor had no choice but to admit that it was definitely their child's and that she had been wearing it that day.
Catherine came in with Thomas and Phoebe. Phoebe asked her parents where Steffy was. Taylor reached out her arms to her two children and held them close as she cried over the loss of Steffy. Catherine took the kids to her room so that Ridge and Taylor could continue their conversation with the officials. Ridge asked the coast guard to continue the search for their daughter but they said they could only keep looking for another couple of hours. Once they left, Ridge did his best to comfort Taylor, who couldn't believe that he was willing to accept the fact that their daughter was dead. Taylor tried to tell her husband that if Steffy was dead, she would know it. Ridge told Taylor that they had two other children who needed them. Taylor broke down in her husband's arms, while Ridge, too, cried for the loss of their daughter.
Thorne and Brooke hurry to the mansion after a call from Eric and are rocked beyond belief when Eric explains that Steffy fell overboard during Taylor and Ridge's trip and has been lost at sea. When they all arrive at Ridge and Taylor's place, Catherine explains the details of the tragic trip on the charter boat and wonders aloud why no screams were heard from the baby as she went overboard. Upstairs, Ridge and Taylor look at photos from their family album. Hearing the family's downstairs, Taylor claims she can't face them so Ridge heads down by himself. While everyone tries to comfort a somber Ridge, Stephanie climbs upstairs to be with Taylor. Morgan takes a tour of a new house with a realtor and agrees to take the place, especially when she learns there is a fallout shelter on the property. The realtor points out that she can see the Forrester house from the front porch and mentions the tragedy that has befallen Ridge and Taylor. When the realtor starts pestering her with questions about her friendship with the Forrester family, Morgan backs off and explains that she'll pay cash and wants the deal closed immediately. Later, as she watches the TV coverage of the death of Steffy, Morgan tells herself how terrible this tragedy is.
The Forrester family all gathered at the church for Steffy's memorial service. Ridge did his best to comfort Taylor. Taylor's father, Jack, arrived and Taylor rushed into his arms. Ridge asked Jack if he would mind saying a few words about Steffy, because he didn't think that either he or Taylor would be up to it. Stephanie and Eric suggested that Ridge and Taylor get away for a few days and go up to the cabin. Ridge thought it was a good idea and asked Taylor what she thought. Taylor was so distracted that she didn't even hear the question. She then excused herself to go check on the kids. Ridge commented that Taylor got up four times the previous night to check on the kids, just to make sure that they were breathing. Stephanie sympathized with what Taylor must be going through. When Taylor went up to the room where the kids were, she overheard Phoebe repeatedly ask where Steffy was, causing Taylor to burst into tears.
Over at Spectra Fashions, C.J. and Sally discussed the terrible Forrester tragedy. Darla joined them later. C.J. mentioned how if must be especially difficult for the Forresters since Steffy had a twin. He commented how looking at Phoebe would be a constant reminder of losing Steffy. Sally replied that they would not need any reminders because the loss of their daughter would always be in their minds. Darla made the remark that she didn't believe in accidents and felt that everything happened for a reason. Sally was quick to point out that there was no good reasoning behind the loss of an innocent child. She asked Darla what possible purpose could losing Steffy in this horrible way, serve. Who could benefit from this loss, replied Sally. They both answered 'no one.'
Morgan dressed in all black, including a black veil that completely covered her face, prepared to attend the memorial service for Steffy. Just then she received a mysterious phone call. She asked the party on the line where he was and when he would be there. She told him that she had to go out but to page her as soon as he arrived.
Before the service started, a disguised Morgan approached Stephanie and expressed her condolences. Morgan made the remark that it was a terrible tragedy to lose a baby, any baby. Jack and Stephanie both said a few words at the service, including thanking the family and friends for being there. Jack talked of how Steffy was with her grandmother Susan in heaven. Stephanie spoke of how Steffy was safe with God now. Ridge had a change of heart and decided to speak a few words. He lamented on how he wished they had Steffy longer but was grateful for the time that they did have with her. Taylor broke down in tears. After the service, the family prepared to leave the church. Taylor yelled out it was wrong for everyone to be talking about Steffy being in a better place because this couldn't possibly have been God's plan for their little daughter. Taylor cried over the fact that Steffy died a cruel death all alone. Brooke approached Taylor to comfort her. She asked Taylor what she would have done had she been able to be with Steffy when she died. Taylor remarked that she would sing to her. Brooke suggested that she do that now. Taylor began to sing "You Are My Sunshine," to her daughter.
Morgan received a page on her beeper and made a quick exit. She arrived back at her house and shortly thereafter there was a knock at the door. Morgan answered the door to find one of the ship's mates from Taylor and Ridge's boat on St. Thomas. She cryptically asked him for something, without saying what the something was. He replied that she would get what was coming to her once he got what was promised to him. Morgan cracked a devious little smile.