The looting thing has been common in our games of late.

Metagamingly so, I've always insured that my characters (regardless of alignment) have some form of respect for the dead and their belongings, and I always ensure that one of the following happens.

a) The loot gets used to resurrect the PC.
b) The loot gets returned to the PC's family.
c) The loot gets donated to an organization that the PC belonged to/would have liked to see things donated to (orphanage, charity, mercenary compound, high-scale military campaign).
d) The loot goes towards downtime-related aspect X (i.e. home base for the PCs, helping out the PC's home town).
e) The loot goes towards a monument/memorial/grave/tomb for the PC (if sufficiently high level).
f) The loot gets buried with the PC (especially or with the exception of a few prize items; if not buried, they're usually kept by PCs as momentos).

I can recall one game where one of the PCs (who was particularly loaded where cash was concerned, as the only remaining original party member) died. She had been a major mentor to my character and essentially taken her under her wing to keep her safe (despite being a conpsiring, theiving, murdering, lawful evil, religious zealot). So, when the other PCs, caring little for her at the time, looted the corpse, I stayed up one night, took all the items when I was on watch, shadow walk'd and walked to her burial site, buried the goods (keeping only her non-magical dagger), and shadow walk'd back before they woke up

It helped build some good tension between the party (none of the players complained, but the characters sure as hell did) and solved the loot problem at the same time. ^_^

The way I do it is I bring him in at normal wealth for his level...minus all the magic items he had when the player died. So if he's supposed to have 30K when he comes in and had 24k worth of items, he now has only 6k to work with. If the other players hoard his items and don't give him at least a few of the items they are being dicks.

Eliminate PC death. Seriously. When a PC gets to 0 hit points or lower, he is incapacitated as usual, but when he reaches -10, he doesn't die.

It isn't fun to die, right? It causes problems. If you're worried about losing battles having no "punch," implement an XP penalty or something. When he gets to -10 or worse, he loses 100 XP * character level.

This cures all kinds of ills with game. Continuity. Balance issues due to corpse looting. Losing your favorite character.

If that doesn't work for you, consider some game-world ideas like The Afterlife -- you must be cremated/buried with your belongings so you can take them to the afterlife with you. Corpses who are robbed are more likely to come back as angry spirits to take revenge on the looters.

We do it the way you described, and I haven't noticed any problems with balance because of it.

The easiest way to maintain balance is to simply load more items onto the badguys. For evil NPCs, alignment-based items are a good way to slow down the arms race as well (unless you happen to have evil PCs).

Hmm, that's a really interesting question--in the games I played in, we just paid for a resurrection spell of some variety. Not that death happened all that often, but yeah. Then we hit 17th level and our cleric became able to cast True Resurrection, and suddenly it didn't matter anymore.

If Fred dies, and the other party members take his stuff (instead of sending it (or the proceeds from its sale) back to his family, but I take it you're not playing a character-driven game), and Fred II comes in with *more* magic items, then the DM should just diminish the treasure for the next couple of encountes. Gigantic non-hoarding undead or something. That will balance the game enough, I think.

I suggest he just rerolls and starts a new character.

Make the death mean something, write in his replacement. I wouldnt offer ANY of the previous character's wealth.

As a house rule, we often would allow a reroll of a character to be introduced with comparable equipment (random rolls) and a level loss.

There is no reason to let the new character benefit from the death of his previous one.

Furthermore, I have never believed in "party balance". I find it far more interesting if people play what they want to, and if it means they have no healer... they just have to think about what they are doing better.

I've been part of and had to deal with this problem in my dnd time. When 3rd first came out our DM allowed us to make an equal level character with no penalties...so it turned out everyone ended up having a cloak of resistance, ring of protection and boots of striding and springing from old dead characters. But after reading the posts here I'm decided to do some of the following things when I start a game in a few months:

-new characters will be one (maybe 2?) levels lower.
-new characters equipment won't be of the PC's choice. Its not like they're handed 5400gp (or whatever amount) and told to go out there and make a name for themselves. It should come over time. Failing this, give them a limited selection to choose from. "No you can't buy that Vorpal Flaming butter knife!"
-Parties who kick the bodies of dead PC's to the side after stripping them of gear will find it harder and harder to find new recruits. Who wants to join a party of adventurers who bring a wagon for dead PC gear? Townsfolk will begin to believe they are cursed/bad luck.
-When a PC does die....think about HOW he died....see what items could be destroyed. If you know the player is thinking of a new character, well then, that mithril breast plate was torn apart. Too shredded to be repaired.

Ask the players would they try to raise dead on you or other players if such thing was possible for us. Assuming the party is friendly. One game I DM'ed had two Elven twin brothers. One died and the surviving one would not let anyone touch his brother or the gear. He carried it all to town and had it sent off to their homeland. He kept the brothers ring of protection. But that didn't matter. He already wore one. It was a memento.

/rant