Remember that in those days, almost everybody was Roman Catholic, and certainly the knights were. So for the most part, knights were buried in the local graveyard where they died. This would have been in "holy ground." As for cremating them;

From;

http://en.wikipedia.org/wiki/Cremation

"The Roman Catholic Church's discouragement of cremation stemmed from several ideas: first, that the body, as the instrument through which the sacraments are received, is itself a sacramental, holy object;20 second, that as an integral part of the human person,21 it should be disposed of in a way that honours and reverences it, and many early practices involved with disposal of dead bodies were viewed as pagan in origin or an insult to the body;22 third, that in imitation of Jesus Christ's burial, the body of a Christian should be buried; and fourth, that it constituted a denial of the resurrection of the body.23 Cremation was forbidden because it might interfere with God's ability to resurrect the body, however; this was refuted as early as Minucius Felix, in his dialogue Octavius.24

Cremation was, in fact, not forbidden in and of itself; even in Medieval Europe, cremation was practised in situations where there were multitudes of corpses simultaneously present, such as after a battle, after a pestilence or famine, and where there was an imminent fear of diseases spreading from the corpses, since individual burials with digging graves would take too long and body decomposition would begin before all the corpses had been interred."

So they were usually buried. Sometimes his liegelord paid for this, sometimes the other knights paid, and sometimes the family paid. If the death took place a long way from home his liegelord or the other knights paid. There was no way for a family to hear about the death or to make payment.
If the death occurred locally, the knight was interred in the family plot and the family usually paid the bill, although if the knight had a lands of his own, then there was no bill since the coffin and internment would have been handled by the family serfs.

This info comes to me from reading, The Cambridge Medieval World History.
Source(s):
http://en.wikipedia.org/wiki/Cremation


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