The corporation continues as a separate legal entity. The business assets and liabilities belong to the corporation itself, not its owner. His shares would be passed to his next of kin or, if he didn't have one, would become property of the state and most likely auctioned off.
If they were dating for long enough and especially living together for long enough, they might meet requirements for common law marriage and inherit the shares (and control, if they have controlling share quantities).
Unless a will, trust, or the corporation docs say otherwise I guess.
Depends. Only 7 US states still recognize common law, and some have hefty length of cohabitation requirements.
As with any asset, it depends on what the will says and what the estate can do.
The business should also have continuity plans for when people in important positions die.
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