IMO the game base design doesn't allow the loose everything on death system. IMO the inventory is too big and the bank too small for that. There's no room in the bank to store extra gears.
A suggestion would be adding deaths door debuff to people who have got killed.
A suggestion that might work, would be a debuff named 'Murder'. You get the debuff if you attack a player. The debuff marks you as murder to everyone that see you. If you got the debuff, you loose a piece of your gear if you get killed. If you attack someone who have attacked you, you don't get the debuff. Using AoE abilities can be perilous...
So i get to lose a Heroic Bow, because i attacked a guy for his apples...
I don't like this idea.