This is hypothetical for me but I have always wondered how one goes about getting thier gun back from thier gunsmith when and if they pass away while the gun is in thier possession.

Better get a repair tag with proper information for FFL and ATF
To hash out

I had a can in jail at a LGS when the owner passed away suddenly.  I don't know the actual legal process, but his adult son was a co-owner of the business - possibly as a co-licensee? - I'm not sure how the FFL survivorship worked.  The son brought in a close family friend as an employee to liquidate the FFL inventory and the owner's personal collection.  My stamp was approved during the final weeks of the shut-down process, so I was able to pick it up before they shut the doors for good.

I have heard that the NFA branch will expidite any pending form 4s in that situation because they obviously have to be approved and items transferred out of inventory before they close out the FFL.

I suppose they could leave applicants in permanent limbo if they wanted but that would lead to lawsuits I'm sure. I'm glad they don't.

Whenever you drop a firearm off at an FFL, whether for gunsmithing or consignment or even shipping to another licensee because someone out of state purchased it, make sure you walk out with documentation that the gun does belong to you and why it's on the FFL's books.  You would be amazed at the number of customers I have who are willing to just leave firearms with us and walk out with nothing to show for it.

If the FFL passes away then look up his license info on the ATF's web site at https://www.atf.gov/firearms/listing-federal-firearms-licensees.

If the FFL was a sole proprietor then you will have to deal with the estate executor to get your stuff returned to you.

If the FFL was a corp/partnership/LLC then hopefully there is another still-alive person who is an owner/managing member/etc. so the status of the FFL is unaffected.  You will have to deal with that person to get your stuff returned, assuming that person isn't going to continue to run the business.  If not, you will be dealing with the estate executor.