What is their current room becoming?
Because I think in the long run they will want two separate rooms. And neither will want the small one lol.

It's on the main floor and it was always supposed to be an office. It's pretty small to... about 10 x 11 and ackward as it has a door out to a deck on one wall, a large window on a wall and the door for the room on a 3rd wall. They've been sharing with

Ditto eventually wanting their own space.

Your existing house, new layout, and taxes might play in your decision as well. Say a 3bed/1bath converting to a 5bed/2bath may put you in comparables out of proportion to your neighborhood (but hits the criteria in the assessor's eyes). If you can't get proportionate-size closets in 2 bedrooms, or if there is odd circulation to get to the rooms, or angled ceilings (cape cod style) reducing floor space that would be a negative. If getting the windows in for 2 bedrooms creates a funky exterior look that may affect your resale later.

Post a plan.

This is the approximate layout. The dotted line is the optional

Isn't it possible to make them similar sized?

Do you want to keep that sitting area?
Is closing in the “open to below” area an option?

And, is the bathroom existing? Does it have to go there?

The bathroom has to go there because of where the pipes are. I'm not sold on the sitting area but my hubby wont budge. Thinks taking away the railing to below and building a wall will make it look too much like a tunnel because we have a cathedral ceilings and the other side of that space is a wall.