Yes, they will be able to keep their current plan less any charges for the 4th line (the $9.99 line fee + any data package or other add-ons). Verizon allows you to make changes to your plan at any time, and the only penalty for removing a line would be the ETF if it is under contract. As long as the line is out of contract, they can remove it without having to make any other changes.
Verizon doesn't distinguish in their plans between the number of lines on a Family Plan. You are on the same "plan" with 2,3,4 or 5 lines, you just have to pay the additional line fees for lines 3 and up.
To add on to what was said above, you do not even need to wait until your contract is up to take your phone and go on your own individual plan. All you have to do is to sign an AOL. There should be no ETF on the Family Plan as long as the 4th line is kept active when it leaves the family plan.