Do The Deceased Know If We Perform Acts Of Merits For Them?
The answer is Yes. In addition,they know how to pay back the person who did the merits on their behalf. There are times they would come in a dream to the person and thank him for his good deed that elevated his soul.
There are many stories that can validate this point. One in particular, the Gemara in tractate shabbas page 152A relates the following story.
There was man who died without leaving any children or family members to sit the seven day mourning period. Rabbi Yehudah went with 10 of his students to the house of this person and taught Torah in the same spot where the deceased would sit. After 7 days the deceased came to Rabbi Yehudah to thank him for giving him peace and tranquility in his world. Any good act performed for the deceased, they know who did it and has a powerful effect on the soul. Therefore every opportunity one has, they should always say before performing the act. I AM DOING THIS IN MEMORY OF , say his name and his fathers name.