Gemara

(Rabah bar bar Chanah): In the Midbar, I saw those who died in the Midbar. I cut the corner of one of their garments, with Tzitzis on it.

Berachos 18a: R. Chiya and R. Yonasan were walking in a cemetery; R. Yonasan's Techeiles (of his Tzitzis) was showing.

R. Chiya: Lift it up (so it will not show), lest the dead say "today they mock us, and tomorrow they will join us!"

Menachos 41a: Clothes designated for shrouds are exempt from Tzitzis. At the time (when he dies), Raminin Lah (we put on the shrouds) Tzitzis, to avoid "Lo'eg la'Rash Cheref Osehu" (mocking the dead).

Kesuvos 111b (R. Chiya bar Rav Yosef): Wheat is planted bare, and it rises with many covers. Tzadikim are buried clothed, all the more so they will rise clothed!

Mishnah (Kil'ayim 9:4): We are not concerned for Sha'atnez in shrouds.

Maseches Semachos (Perek 12): Aba Sha'ul ben Bitnis told his children to bury him by the feet of his father, and to remove the Techeiles from his Talis.

Maseches Tzitzis (after Avodah Zarah, p.63): We do not untie Tzitzis from a Mes. Aba Sha'ul ben Bitnis permits. Aba asked to remove the Tzitzis from his garment, for they have Kedushah. Chachamim say, they have no Kedushah. We may use them for shrouds or a saddle.

Nidah 61b (Beraisa): If Kil'ayim was lost in a garment, one may use it for shrouds.

Inference (Rav Yosef): (We are not concerned that the Mes will be wearing Sha'atnez when he is revived.) This shows that the Mitzvos will cease!

Question (Abaye): R. Yanai permits clothing the Mes in such shrouds at the time of eulogies, but we may not use them for burial!

Answer (Rav Yosef): R. Yochanan permits them even for burial. He expounds "ba'Mesim Chofshi" -- once someone dies, he is (forever) exempt from Mitzvos.

Rishonim

Rif and Rosh (Hilchos Tzitzis (after Menachos) 11b and Siman 9): We put Tzitzis on the shrouds, to avoid Lo'eg la'Rash.

Rambam (Hilchos Kil'ayim 10:25): One may make shrouds from Kil'ayim, for Mesim have no Mitzvos.

Question (Rosh Mo'ed Katan 3:80): Tzadikim will return to life clothed (Kesuvos 111a). Menachos 41a connotes that we put Tzitzis on shrouds after death. Why are we not concerned for Sha'atnez in shrouds (Kil'ayim 9:4)?

Answer #1 (Rashbam, in Tosfos Nidah 61b DH Aval): Even a living person may wear Kil'ayim without benefit. A clothing salesman may wear Kil'ayim, as long as he does not intend to be protected from the sun or rain.

Rebuttal (and Answer #2 - Rosh): Also Tzitzis is obligatory only if worn for benefit - "your garment that you are covered in." A clothing salesman is exempt from Tzitzis, yet Lo'eg la'Rash applies! R. Tam says that Lo'eg la'Rash applies more to Tzitzis, which (through its Gematriya, knots and strings) is equal to all the Mitzvos. Also, it is evident if a garment has no Tzitzis, but Kil'ayim is not evident. We cannot prove from Mesei Midbar that we put Tzitzis on shrouds, for they entered their graves dressed on Erev Tish'ah b'Av (Eichah Rabsi).

Rosh (ibid. and Berachos 3:5): Why is our custom to remove Tzitzis from a Mes' shrouds? R. Tam answers that Tzitzis are testimony one fulfilled all the Mitzvos, we and not worthy of this. The Medrash says that 'l'Dorosam' is written missing a Vov, i.e. Dor Tam (a perfect generation). Also, previous Doros wore Tzitzis all day, so they put them on shrouds due to Lo'eg la'Rash. Nowadays, many people do not wear a four-cornered garment; we do not put for them in their death what they did not fulfill in life. We do not put only on those who wore Tzitzis in their lives, lest others be ashamed. We should not shame them, for the Torah obligates only one who wears a four-cornered garment. Aba Sha'ul ben Bitnis told his children Lehatil Techeiles from his Talis. 'Lehatil' (normally) connotes to put on, but here it says 'from my Talis', not 'on my Talis', so it means 'to remove.'

Ba'al ha'Ma'or (Mo'ed Katan 16a DH Aba): Some say that Raminin Lah means that we remove Tzitzis from shrouds. The primary opinion explains that we put them on, for it says Raminin Lah (on it), not 'Minah' (from it). The Ri bar Malki Tzedek explains that we put Tzitzis on shrouds when carrying the Mes to the grave. Lo'eg la'Rash applies then, for the carriers are wearing Tzitzis. When we bury him, we remove the Tzitzis, to fulfill R. Yochanan's opinion that Mitzvos will be Batel in the future.

Hasagos ha'Ra'avad: We put Tzitzis on shrouds, without tying them on. If they were tied, we untie them. Since there are Tzitzis, the living do not mock the Mes. Since they are not tied, he doesn't mock other Mesim. The episode with R. Yonason shows that normally, we bury Mesim without Tzitzis.

Rebuttal (Rosh ibid.): We cannot learn from the episode! Even if Mesim have Tzitzis, since they are not fulfilling the Mitzvah, Lo'eg la'Rash applies.

Hasagos ha'Ra'avad: Some say that Aba Sha'ul was concerned lest the Techeiles perish, not for Lo'eg la'Rash. My first Perush is primary. However, since also removing the Tzitzis is due to Lo'eg la'Rash, the Gemara should have mentioned it. We cannot say that it is because Mitzvos will not be Batel, for the dead are not commanded about 'Bal Tosif' (adding to Mitzvos).

Milchamos Hash-m: Aba Sha'ul's father commanded to remove his Tzitzis when he dies, for they have Kedushah. The Halachah follows Chachamim; things used for a Mitzvah may be discarded. Aba Sha'ul agrees about Tzitzis put on shrouds (that they have no Kedushah), for they are put on at that time (not for a Mitzvah,) only due to Lo'eg la'Rash.

Rosh (ibid.): We often follow minor tractates against the Gemara. Rabbeinu Meir says that Aba Sha'ul used to wear a linen garment. He put Tzitzis in it, like Beis Shamai. He commanded his children to remove its Tzitzis, like Beis Hillel. Akavya ben Mehalalel similarly told his children 'follow the majority of Chachamim who argued with me' (Eduyos 5:7). If so, there is no proof from here. R. Yehudah of Paris says that Menachos 41a is like Shmuel, who holds that Mitzvos will not be Batel in the future (Shabbos 151b). Burial without Tzitzis is Lo'eg la'Rash, for he will be revived without Tzitzis, and he will be obligated then. Shmuel explains the Mishnah in Kil'ayim like R. Yanai, who permits Kil'ayim at the time of eulogies, but not for burial. We bury Mesim without Tzitzis because we hold, like R. Yochanan, that Mitzvos will be Batel. A Medrash says that the Parshah of the one who gathered wood on Shabbos is put next to the Mitzvah of Tzitzis to teach that Mesim must have Tzitzis. This Medrash is like Shmuel. When Rabbeinu died, he commanded 'the Tzitzis Chutz.' It is not clear whether he wanted them removed, or that they should hang outside the casket.

Poskim

Shulchan Aruch (YD 301:7): One may make shrouds from Sha'atnez, even to bury the Mes in them.

Beis Yosef (DH Tachrichei): The Rambam and Rosh rule like R. Yochanan.

Bach (DH Tachrichei): The Beraisa permits a garment in which Kil'ayim was lost. If the Kil'ayim is evident, this is Lo'eg la'Rash. We disqualify Tzitzis in shrouds so it is not evident. One should be stringent, even though the Tur says 'similarly, one may make a saddle from Kil'ayim', i.e. even if it is evident.

Shulchan Aruch (YD 351:2): We bury a Mes only in a Talis with Tzitzis.

Rema: Some say that it does not need Tzitzis. The custom is to bury a Mes in Tzitzis, but first we disqualify them or cut one of the corners.

Beis Yosef (DH uv'Inyan): Toras ha'Adam (p. 98) discusses the opinions, and concludes that one should bury only with Tzitzis. The Mordechai (Mo'ed Katan 863) counsels to remove the Tzitzis from a corner and tie them on.

Darchei Moshe (1): Avi ha'Ezri says that we remove the Tzitzis only from one who did not normally wear Tzitzis in his life.

Bach (DH uv'Inyan): The Roke'ach forbids removing Tzitzis from a Mes' garment, for R. Yanai forbids burial in Kil'ayim. The Halachah does not follow R. Yochanan and Aba Sha'ul ben Botnis, who say that Mitzvos will be Batel. The Ri commanded to tie Tzitzis to the corners of his shrouds, so when he is revived he can untie them and fulfill the Mitzvah. It seems that he ordered to tie Tzitziyos of each pair of corners together, so there will be no Mitzvah. Most opinions say that one should not disqualify the Tzitzis; one should follow them. One can tie the Tzitziyos or cover them, to fulfill both opinions.

Drishah (1): We do not require Tzitzis or forbid Kil'ayim in shrouds, because the Mes does not benefit from the garment. It is proper counsel to put Tzitzis and avoid Kil'ayim, so the Mes will be able to wear it when he is revived.

Kaf ha'Chayim (OC 23:7): We bury a Mes with Tzitzis to show our Emunah that he will be revived with the clothes he was buried in.