Is it permissible to forgive the deceased for a wrong they committed during their lifetime against another person, and does this forgiveness reach them?

It is permissible, according to Islamic law, for the owner of a right to forgive and pardon the deceased. Indeed, it is encouraged, and the deceased benefits from it, due to the generality of the texts that mention the virtue of forgiveness, such as the Almighty’s saying: "And let them pardon and overlook. Would you not like that Allah should forgive you?" and the Prophet’s (peace be upon him) saying: "And Allah does not increase a servant in anything due to forgiveness except in honor." These texts are absolute and include both the living and the dead, and the deceased is more in need of having their liabilities cleared. Releasing the deceased from an obligation and clearing their liability is achieved through settlement and forbearance, or through pardon and forgiveness.