In lieu of flowers can a family ask for memorial funds to aid in final expenses in the obituary when a body is cremated?

Why not?

Best to set up a separate bank account to route these thru in order not to be accused of intermingling funds. Any bank can help you with this. Any donation, no matter the payee can be deposited into the account when endorsed.

An obituary placed by the family (or anyone) is a form of free speech- like all speech, it entails a certain amount of responsibility and carries repercussions. You can tell people not to send flowers and do ten push-ups and three squat thrusts while singing the national anthem for all it matters. If what you are asking is: "Is it 'proper' to ask for money?" - it's better to tell people directly NOT to waste money on flowers, etc. especially if that is the wish of the deceased.