You must contact Ebay. Seriously. It's the only way to handle this -- call Ebay and tell them you have been told that your buyer has died. You wanted Ebay to know so they can secure and close the account. Ask who you can forward the "death notice" email to.
Then send it to Ebay so they can close the account.
Then do the same with Pay Pal. Forward the email to them so they may secure the account and close it.
Then you leave fb for the buyer:
Family advises buyer has died. My sincere condolences. Please let Ebay know.
THAT Ebay won't remove. Can even imagine Ebay getting a request to remove that? It would alert Ebay that there IS a problem with the buyer.
Then you write the family member back:
Dear buyer's family,
Thank you for letting me know, you have my most sincere condolences. I have forwarded your email death notice to both Ebay and Pay Pal so they may close your mother's accounts in accordance with the user agreements. I am somewhat concerned to see that someone is accessing your deceased mother's account, did you know that is happening? Ebay doesn't let an account stay open when someone has died so hopefully they will secure and close the account very soon.
God bless you in your time of grieving. If there is anything else I can do to help, please let me know.
Your Seller
Just do it. Seriously.