One possible scenario could be that Luffy sacrifices himself to save his crew during a major battle against an extremely powerful enemy. He might use all his strength and energy to protect them, and in the end, it's too much for his body to handle.
Nami would be inconsolable at first. Luffy has always been there to protect her, and his sudden death would leave a huge void in her life. She would probably cry for days. As time passed, she would remember all the things Luffy taught her about courage and believing in oneself. Nami would start to take on some of Luffy's leadership qualities in a way. She would be more outspoken about her plans for the crew and more determined to see their dreams through. She would also keep Luffy's memory alive by telling stories of his adventures and his selfless acts to new people they meet on their journey.
In this type of fanfiction, one possible plot development could be that Luffy sacrifices himself to save Nami from a powerful and unbeatable enemy. Maybe an enemy with a devil fruit power that can only be countered by Luffy's unique abilities, and in the process of protecting Nami, he exhausts all his strength and ultimately dies.
One possible plot development could be that his death shatters the Straw Hat crew. They might disband in grief, each going their own way. Zoro could become consumed with revenge, vowing to take on the Marines who were responsible.
Nami would probably be heartbroken. She has been with Luffy through so much and his death would leave her feeling lost and alone. She might even lose her will to continue sailing at first.
Nami would probably be devastated. She has been with Luffy through so much, and his death would be a huge blow. She might become more withdrawn and serious, as Luffy was often the one to bring out her lighter side.
The other characters' development would be completely derailed. For example, Chopper, who looked up to Luffy as a source of inspiration, would probably lose his confidence. Robin, who had found a new family in the Straw Hats with Luffy as the core, might isolate herself again. Without Luffy, the bonds that held the crew together would start to crumble, and their individual character growth would be stunted.
The impact would be huge. First, the Straw Hat crew would be devastated. They would likely lose their motivation and purpose. Zoro might go on a vengeful spree. Also, the whole world of pirates would be shaken. Luffy was seen as a rising star, a symbol of hope for many. His death could lead to a power vacuum that other pirates would fight to fill.
I think Shanks would have an interesting reaction. He has known Luffy since he was a kid. Seeing Luffy reach Gear 5, he would probably be proud but also a bit cautious. He might think about how far Luffy has come and also wonder what challenges this new power will bring for Luffy and the world at large.
Luffy would probably be super excited. He's always been on this big adventure, and meeting his dad would be like a new milestone. He might jump up and down and start asking a million questions right away, like what his dad has been doing all this time and if he has any cool stories from his own adventures.