How to adress failed PhD project from last year to gain admission at same University for Master's Degree?
I think that the best way to go about it would be to just be up-front with that you've been enrolled Before and that the loss of a close family member forced you to abandon the project. It all depends on the person on the other end going through the applications, it can go either way. 

In any case i believe that NOT telling them about this has the chance of biting you in the future, so best just disclose it.