Netherlands manager Van Gaal again refused to confirm his intentions to reporters at the Dutch training headquarters on Friday but he is widely expected to take over at United after the World Cup.
Giggs, who finished the season as acting manager after David Moyes was sacked, could stay on as his assistant.
Former team mate Schmeichel, who played almost 400 games for United, and is now an ambassador for the club, told Sky Sports news: "What Manchester United need more than anything is someone with a clear direction.
"Van Gaal, everywhere he's been, has always had a clear direction.
"Some of the places he's been it's led to outright war.
"I don't think that's going to happen here."
The former Danish European Championship winner said Van Gaal had the required experience for a job that proved too much for Moyes but that Giggs's knowledge of the club would be invaluable to him.
"I think we have a certain way we want to be, Van Gaal has a certain way of playing and I think it's not far from each other," Schmeichel added.
"It's very important that we have someone who's extremely experienced with the best players in the world. If it's him and it looks like it, it's a good fit.
"Ryan Giggs has been mentioned as his number two and I think that would be a fantastic pairing.
"You've got the young prospect, who's been here all of his life, and the manager who's coming in with his own ideas and if you can combine those two things it's great.
"It's important there's someone next to him who understands what kind of football club this is."