During KoE we will be creating the recent history of Elyria up to exposition. So as we get closer to that point we will see how that plays out.
My assumption would be that we would elaborate our desire with our Surname and family and upon selection of the exact location we want our package to impact (aka what town I own in game or what family I will inhabit) the game would generate the existence of the family in a manner that fits our specifications as if they were there all along with the stat focus we wanted. This is all conjecture and not actually proven by the devs. As it stands, this topic hasn't been addressed yet because they likely haven't started working on the code to the degree they can speak confidently on what they can provide us.
As far as when this will be addressed, it really all hinges on when the developers start domain selection at the Baron level and populate the map with a self-sustained NPC population that we enter in on during KoE.
The most recent domain selection period that will come some time soon will stop at the County level because, while the map will be official at that point, what is actually procedurally generated on the map won't happen until closer to KoE when those systems are more detailed.
Domain Selection as a whole will happen rather early just so that recruitment for communities can be more specific and we can all know where we are on a map so we know who we are playing the dance of dynasties with (aka who our Queen/King is and who our neighbors will be).