Do I lose materia and equipment when I lose a character?

SPOILER: This question involves major plot points of the game.

Now that I know Aeris dies I don't want to give her any equipment or materia because I'm afraid of losing it ... except at this point in the game I'm forced to have her in my party and without equipment/materia she brings my party down.

So I wonder:

Is it possible in Final Fantasy 7 to lose equipment by giving it to a character who leaves/dies? If you can answer for Aeris only it's still much appreciated.

No, her materia is automatically returned to you. You do lose her weapon and armor, but you get to keep her accessory.

The answer is yes as to armor and weapon. They can be lost.

It's also worth noting that

there is a very brief time after the last Temple fight but before you lose control of Aeris where you can access the menu. It's when Cloud and Aerith are in the pit, and is probably a fraction of a second.

You can use that to unequip the weapon and/or armor if you want to use them but don't want to lose them. However, I wouldn't count on being able to do this successfully - at the very least, have a save file ready.

Source.