What is the ruling on making dinner on the third day after a death as an act of mercy for the soul of the deceased and reciting the entire Qur’an in the presence of a sheikh?

It is not legislated for the family of the deceased to prepare food, whether from the heirs' money or from one-third of the deceased's bequeathed wealth, because it is contrary to the Sunnah. The Sunnah is that food should be prepared and presented to the deceased's family, not that they prepare it themselves. This act is considered a form of wailing (niyaha) that distresses the deceased. If the food is prepared from the heirs' money and there are minors among them, or those who are unwilling, then this is an infringement on their rights.

Nor is reading the Qur'an for the deceased legislated in this manner, as it is an innovation that was not reported from the Prophet (peace be upon him) nor from his companions. Hiring a reciter for this purpose is reprehensible; a reciter who reads for money receives no reward.

What is legislated is: showing kindness to the deceased's family, comforting and consoling them, preparing and presenting food to them, supplicating for the deceased, and giving charity on their behalf.