I would plant a tree that was somehow associated with the loved one. But I'd only do it if they wouldn't mind--my mother, for example, hates nature except when it's in a painting or a photograph so that it doesn't smell, drop leaves or wilt. Definitely not someone I would plant a tree for, unless it was a plastic tree.
I have a story about a tree-planting ceremony gone awry, actually. I went to a funeral of a friend's son. I didn't know his son too well, I was going mostly for my friend. So for the funeral they were planting this tree over his cremains, and then you were supposed to take a pinch of special Native American tobacco and sprinkle the tobacco on the tree, around the tree, in the general vicinity of the tree, and say something nice or have a moment of silence. There were a lot of people at this funeral and we ended up walking up to the tree in twos. The lady who walked up to the tree with me was a total stranger, who instead of grabbing a mere pinch, grabbed a huge handful and flung it into the air just at the moment when a giant gust of wind blew up. So I was doused in freakin' tobacco stuff, it's all over my hair, and as I flailed around trying to dust myself off, I realized that I had just stepped in something which was most definitely not mere dirt. Instead of leaving the cremains in the box and burying the box under the tree, the bereaved had dumped the ashes all in the dirt, which was about to be shoveled around the tree root ball. Urgh.
So, yeah, word of advice: The cremains will be returned to you in a box. Leave 'em there, please, just bury the whole box or something. I realize that the humus of the soil is made, literally, out of dead bodies, but it's still oogy to think about who you just stepped in.