There is no difference of opinion among the scholars (may Allah have mercy on them) concerning the fact that the Sunnah is to raise the hands when saying the first takbeer of the funeral prayer.
An-Nawawi (may Allah have mercy on him) said: Ibn al-Mundhir said in his book al-Ishraaf wa'l-Ijmaa: They are unanimously agreed that (the worshipper) should raise his hands when saying the first takbeer, but they differed concerning the rest of it.
End quote from Sharh al-Muhadhdhab, 5/190
With regard to the other takbeers, the scholars (may Allah have mercy on them) differed as to whether the hands should be raised or not?
In al-Mawsooah al-Fiqhiyyah (16/29) it says: He should only raise his hands in the first takbeer, according to the Hanafis. This was the view of Maalik and it is the more correct view according to their madhhab. â¦ The Shaafais and Hanbalis said that it is Sunnah to raise the hands with every takbeer. End quote.
Ibn al-Mundhir favoured the view that the hands should be raised with every takbeer. See al-Majmoo, 5/190
Shaykh Ibn Baaz (may Allah have mercy on him) said: The Sunnah is to raise the hands with all four takbeers, because it is proven that Ibn Umar and Ibn Abbaas used to raise their hands with all the takbeers. Ad-Daaraqutni narrated it in a marfoo report from Ibn Umar with a jayyid isnaad.
End quote from Majmoo al-Fataawa, 13/148
Shaykh Ibn Uthaymeen (may Allah have mercy on him) was asked: Which is better, to raise the hands or not raise them in the funeral prayer?
He replied: The correct view is that raising the hands with the takbeer in the funeral prayer is Sunnah with each of the takbeers, as was clearly narrated from Ibn Umar. Such tawqeefi matters (i.e., matters that must be based on sound reports and cannot be subject to ijtihaad) can only be determined on the basis of a text. In fact it is narrated that the Prophet (blessings and peace of Allah be upon him) used to raise his hands with every takbeer.
End quote from Duroos wa Fataawa al-Haram al-Madani.
He also said: The correct view is that (the worshipper) should raise his hands with every takbeer, because that is narrated in a saheeh report from Abdullah ibn Umar (may Allah be pleased with him). With regard to the view of some, that it should be done only in the opening takbeer, this is the view of some of the scholars, but the correct view is that it should be done with every takbeer. End quote from Majmoo al-Fataawa, 17/134
And Allah knows best.
Reproduced from Islam QA