I too am sorry to hear the news re CMM was sobering. I also think he probably has done a lot of thinking about how things will play out, and I am glad he's trying to do what he can now. I smiled when I realised he's just not the sort of person that tolerates owing anybody anything. I think there might be a few of us on this board who can empathise with him.
Re the asset split for the kids - maybe you could ask the oldest one if he'd agree to a valuation when the time comes, then for him to pay out the other two their shares after the 401 split has been done. That way your oldest won't be obliged to house anybody and the other two will be free to purchase whatever they want.
Like you, I have the problem of XH's OW being closer in age to my children than himself. I very much doubt my children will inherit much of value from him. I absolutely understand how much you want to be able to give your children just a bit of help when you're gone.