The household structure and family formation relationship has been theoretically central to family sociology and social demography. However, empirical evidence of strong links has been elusive, perhaps because the important links change with modernization and vary across societies with different heritages. We examine the relationship in Thailand where postnuptial residence expectations vary by ethnicity and residence. As expected, the relationship between household structure and family formation is weak, but the pattern changes in a theoretically appealing manner. Strength of the relationship depends on the institutional context which defines parental roles and stakes in the marital choice and fertility behavior of their children. Quite unexpectedly, our work shows that postnuptial residence has been conceptualized far too simplistically: husband and wife often live apart after marriage and this pattern has been quite common for some time in Thailand. After demonstrating the plausibility of this finding, we discuss its theoretical implications.