UPDATE:
-- No splitting the dynasty household.
1. No splitting your dynasty household into two or three different household. Everyone that is moved into your household must remain there until they die of old age, this also means no moving out anybody from your dynasty household.
2. If you wish to invite an NPC into your dynasty household, you can choose to move in a single person or two or an entire household. However you must use the social interaction "ask to move in", cannot use manage world to move portraits around and move in your NPC.
3. The "ask to move in" interaction will eventually bring you to the merge/split household screen. You can then choose to move in the one person, or two, or an entire household. After finishing, you return to live mode and continue your game. You cannot go back to manage world and mess around with splitting/merging other NPC households.