I have private sharing mode (OWD) for a custom object. Thus, only record owners have access to their respective records. Now one of the owner (user) needs to be deactivated. how to handle the records owned by him? What is the conventional way to handle this scenario?
Anyone above that user in the Role Hierarchy will still have access, even if the owner is inactive.
Ultimately you will want to reassign these records to a new user.
You can do this 1-by-1 by simply changing the record owner https://help.salesforce.com/articleView?id=data_about_transfer.htm&type=5
to transfer everything at once, use the Mass Transfer tool https://help.salesforce.com/articleView?id=admin_transfer.htm&type=5