To begin open a blank document in Word size 8.5x11".
Because our stencil is white, and our background is white, the first step is to add color so we can see what we are doing.
ADD SOLID COLOR
Go to Design in the top menu then Page Color. In the drop down menu you can select any color for your background. You can easily change this later by going back to the same menu options. See image on the right.
ADD PATTERN
Adding pattern as a background is a little trickier and we'll be covering another method below. But to set a pattern as a background you can use the fill effects option in the Page Color menu.
Add gradients along with pre-installed textures and patterns or a picture.
Using picture, a seamless pattern will tile it automatically, however, it doesn't give you an option to adjust tile sizing in the current version of Word.
If your pattern is too large (12x12") reduce it in size using an image editor. Depending on the pattern 2 or 3" is probably going to work better.

INSERT TEMPLATE
Now that we have some color on the background we can insert our template and we'll be able to see it.
Go to Insert in the top menu then choose >Pictures>This device. Navigate to your template and be sure to choose the PNG file version that has the shape cut out from the canvas to form a stencil.
Initially Word is going to place that template mid page and sized smaller than you'll want it. So you'll need to make a couple quick adjustments. With the template selected go to Picture Format in the top menu. Then in the Wrap text menu choose 'behind text'.
You'll now be able to resize the template to fit the page exactly by dragging each corner and moving the template into position. The sides will glow green when you have positioned it exactly to the edges.
See illustrations below for each step.



Now we're ready to design! From here, all you need to do is layer your design elements under the template layer. Text elements can go on top if they fit neatly with the shape.