It is mustahabb to remove the deceased’s clothes when washing him
Question

                Is it permissible to wash the deceased without removing his clothes?
Praise be to Allah.It
is mustahabb when washing the deceased to remove his
clothes -- this is the view of the majority of scholars -- apart from his ‘awrah, which must be covered, and there is no difference of
opinion on this point.
Al-Bahooti (may Allah have mercy on him) said: Then his
clothes should be removed -- this is recommended, because that makes it
possible to wash him and purify him more effectively, and it is more akin to
washing one who is alive, and it is more likely to protect him from impurities
if it is possible that such may come out of him, and because the Sahaabah did that based on the fact that they said: We did
not know whether to remove the Prophet’s clothes as we did for our dead. 
End
quote from Kashf al-Qinaa‘,
2/91
It
says in al-Mawsoo‘ah al-Fiqhiyyah,
13/52: The Hanafis and Maalikis
are of the view that it is mustahabb to remove the
clothes of the deceased when washing him, because the purpose of washing is to
purify and that may be done more effectively by removing the clothes, and
because if he is washed in his clothes, the clothes may be made impure (najis) by what comes out, and he may not be purified. The
correct opinion according to the Shaafa‘is is that he
may be washed in his chemise. As for covering the ‘awrah,
there is no difference of opinion concerning that. End quote.
Shaykh
Ibn ‘Uthaymeen (may Allah
have mercy on him) said: The correct view is that his clothes should be removed
apart from his ‘awrah, which is the area between the
navel and the knee.
End
quote from Sharh al-Kaafi.
And Allah knows best.