Buddhists believe that the soul after death departs from the body. The soul carries with it, only good and bad deeds & nothing else. This is why, prayer flags are hoisted after death of a person because it is believed to deflect bad deeds. Bad deeds are the root cause of unholy birth circumstances and unfortunate rebirths. 

White prayer flags for the dead need embedded Mani mantra  ཨོཾ་མ་ཎི་པདྨེ་ཧཱུྃ།

The mantra purifies the six deadly sins; pride, jealousy, desire, ignorance, possessiveness and anger.

108 prayer flags need to be hoisted for the departed, often having written names of the one passed away. It is believed that prayer flags guide the dead through the existence between death and rebirth (bardo), leading them to a good, if not better rebirth. 

Prayer flags are an important and deeply spiritual part of Bhutanese culture. Different prayer flags serve different purposes. Tall, white prayer flags are used not just for personal spiritual benefit, but also for healing, and honoring the dead.