Family sharing initial setup

Considering setting up spouse and I on Family Sharing and Apple One. Each of us have our own Apple ID, separate iCloud contacts, calendars, etc… She has a 200GB storage plan, I have a 50GB storage plan. My question is what exactly happens to the existing storage when setting up the share account? Do they remain separate? Do we lose the content of one of the plans? Do I have to merge the files prior to account setup if using the shared storage option? I haven't seen any support document speaking to this situation and hope to avoid a "surprise". Thanks in advance for any thoughts.