In a medium bowl, whisk together warm milk, water, and yeast. Let it sit until foamy, 5-10 minutes.
Mix in 1/2 cup of flour and let it rest until doubled in size, about 25 minutes.
In a stand mixer, cream 1/2 cup butter and 1/2 cup sugar until fluffy. Beat in eggs one at a time.
Add the yeast mixture to the stand mixer and mix with a dough hook. Gradually add the remaining flour.
Mix in orange zest, anise seeds, and salt. Knead until the dough is smooth.
Place dough in a greased bowl, cover, and let rise until doubled, about 1 1/2 - 2 hours.
Punch down the dough, divide into 6 pieces, and form each into a ball with 'bones' on top.
Let the shaped dough rise again for about 45 minutes.
Preheat oven to 350°F. Bake the bread for 25-30 minutes until golden brown.
Melt the remaining butter and brush on each pan de muerto before dusting with sugar.