You can both select a family that has enough NPC's to spawn into to be part of the same family, or as bloodline + you'll have your own family that will have family codes that will enable you to be able to open or lock those codes so that you are able to give it to people who you want to be part of your family granted that you have the NPC's available for them to spark into.
https://chroniclesofelyria.com/blog/414/Design-Journal-5-Families-Family-Selection
https://chroniclesofelyria.com/blog/435/DJ-6-Character-Customization-and-Bloodlines
You can both start in game in the same family, or from different families and merge them or whatever you want to do. When you have a surname for yourself from the surname package it just unlocks that surname to play in game~! So you don't have to select it. It becomes one of your available surnames to choose from during character selection.