I think Buddhism and Taoism are in the same league. Not only do
they share the same cultural heritage (for Chinese Buddhism), they
are also common in that both religions' teachings do not alienate,
persecute, pressurize, proselytize and convert people of other
faiths. More importantly, both religions emphasize one's deeds and
moral ethics over the name/shape/appearance of a deity one has to
believe in.
Ultimately, funeral rituals are just that... a ritual. Your
deceased grandparents will still enjoy the merits of their good
deeds be they Buddhists or Taoists. And they will also stand to
enjoy the transference of merits flowing from their descendants'
good deeds, whether those descendants are Buddhists or
Taoists.
