I think you should be able to train him out of this, but because kids are involved, I'd recommend a professional trainer if you can afford it. Another YT member recommended the book 'Mine' to deal with resource guarding.
Maybe you can baby gate or x-pen him while kids are around, or just think about when he's out - it sounds like it would be fine for him to be out when they are napping for instance. I bet you can work it out.
Also, you can probably get a feel for which kids it's okay for him to be around, and which are more rambunctious, etc. I bet the kids would love to have special training sessions with the dog where they learn to pet him. A lot of kids come up to Thor and he's very friendly, but they often have no idea how to pet a dog. A lot of times they sort of try to slap his head. Or my boss's kid, who loves to steal Thor's toys, the other day his dad told him to give the toy back, and he threw the toy right at Thor and beaned him! I taught him how to throw the toy AWAY from the dog. You could have them take turns playing fetch with him, etc. Just keep it controlled and supervised.