Well, it could be that his family's secrets or some sort of family curse led to his death. Maybe his family had a connection to a powerful and dangerous enemy who targeted Naruto because of that family link.
His family might play a direct role. For instance, if his family had some sort of dark pact or obligation that required Naruto's sacrifice. It could be something that was set in motion generations ago within the family.
In the Naruto series, Naruto doesn't have a biological sister in the original story. So in this fanfiction, the author probably creates a new character to be his sister. It could be an original character with unique abilities and a complex backstory that leads to the situation where Naruto dies by her hand.
In such a fanfiction, Naruto could die in various ways. Maybe his sister is somehow possessed and attacks him fatally. Or there could be a situation where she accidentally causes his death during a fight due to a lack of control over her power.
One possible reason could be that his newfound 'godlike' powers make his family feel estranged. They might not understand his sudden transformation and the magnitude of his power, which creates a sense of fear or discomfort, leading them to ignore him.
He could also distance himself from them. Naruto might choose to avoid his family, not wanting to be around them as a way to show his anger. He could move out or stop participating in family activities.
The Fairy Tail guild members might feel guilty. If Naruto had befriended some of them, they would be devastated. There could be a split in the guild, with some members blaming others for Naruto's death. For example, if a hasty decision by a guild leader led to Naruto being in a dangerous situation where he died, there would be internal strife.
Sasuke would be deeply affected. He and Naruto had a complex relationship, from being rivals to friends. He would likely feel a sense of guilt, as if he should have been there to protect Naruto. Sakura would be heartbroken. She had always cared for Naruto, and seeing him die in such a tragic way in front of his parents would make her feel helpless. His parents, on the other hand, would be in utter despair. His father might feel like he failed as a father again, not being able to protect his son this time either.
Maybe he has some personal grudges or misunderstandings within the family in the fanfiction. It could be that something happened in the past that made him feel betrayed or unappreciated, so he refuses to offer help.
Perhaps Naruto is poisoned by a powerful new villain. His parents are revived just in time to see him succumb to the poison. This event could trigger a series of events where his friends and the entire village vow to avenge his death. His parents might then decide to stay in the living world to help in this quest for vengeance, despite the rules of the afterlife.