I let them start with base points for lowest level player in the party.
This means they are a bit behind rest of party but that will even up eventually.
As for cash: I know exactly how much players have in cash/gems and in items. For players that have died also the same rule; the same as the lowest in the party. I also include the rule that 60% has to be spent on gear of this amount. All purchased items have to be cleared by me before first introduction into the game of the new character.
So the have some small penalties for death but nothing mayor.