Before we were born we lived in the presence of God but we had no body. We were spirit children of our Heavenly Father. He presented this plan, with Christ as the center, so that we would be able to have all of the blessings our Father in Heaven wanted to give to us.
Under the Direction of the Father, Jesus Christ created the Earth. All things are and were done in order, and we needed somewhere to go to gain physical bodies, and to be tested.
Heavenly Father then created Adam and Eve.
-- 1 Corinthians 15:22
"There are also celestial bodies, and bodies terrestrial:
"Wherefore, if ye have sought to do wickedly in the days of your probation,
then ye are found unclean before the judgment-seat of God;
and no unclean thing can dwell with God;
wherefore, ye must be cast off forever.
and deny them not."
-- 1 Nephi 10:21-22