Her data stays where it is and continues to be accessed via her Apple ID. Only the billing and amount of available storage changes.
Also see information in Share an iCloud storage plan with your family - Apple Support including the following:
If you already had an iCloud storage plan
When you share your iCloud storage, any family members using the free 5GB plan are added to your family plan automatically.
If a family member is already paying for their own iCloud storage plan, they can choose to switch to your plan or keep their own and still remain part of the family. When they switch to the shared family plan, they get a refund for the remainder of their personal plan. They can't keep their current plan and use the shared family plan at the same time.
Follow these steps to switch to the shared family plan on an iPhone, iPad, or iPod touch:
- Go to Settings > [your name].
- Tap Family Sharing, then tap iCloud Storage.
- Tap Use Family Storage.