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Parenting lets you link one or more layers to another layer so that they move, rotate and scale together. As the name implies, linking layers this way creates a parent-child relationship in which the child inherets all the basic transformation properties applied to the parent (except for opacity), while the parent inherits nothing from the child.

Imagine you have two layers, Layer A and Layer B, and you make Layer A the parent of Layer B. If you now move Layer A, Layer B will move along with it, maintaining it's relative position to Layer A. If you scale A, B will scale too - not independently, but as if B were actually a part of A. If you rotate A, B will rotate around A, as if they were one big object. However, if you move, scale, or rotate B, nothing will happen to A.

The power of this type of relationship is that you can apply keyframes to the child elements which will then be combined with the keyframes on the parent layer. For instance, Layer B could have rotation keyframes which make it spin in place. If you now make Layer A rotate as well, Layer B will spin as it rotates around A, which would require a lot mor keyframes to achieve if you tried to do it without parenting.

For a real world example, imagine you had a picture of a car, and you created layers in Photoshop with each of the wheels separated from the body. In AE, you could make the wheels spin steadily with a couple of rotation keyframes. You could then make the body of the car the parent of the wheels - now if you animate the car moving around on screen, the wheels will always move with it in the proper position while they continue to spin as well.

Using Parenting

You always select the parent for a layer from the layer you wish to be a child. The process is pretty easy:
  1. Start with a comp with at least two layers - one to act as the child, one to be the parent
  2. Your timeline should have a column called "Parent", and each layer on your timeline will have a drop down layer in this column which is initially set to "none". On the child layer, click on this menu and from the list of layers select the layer you wish to be the parent of the layer.
  3. Now try moving the parent layer - the other layer should move with it. Try moving the child layer - the parent will stay in place. Move the parent again and you'll see that the child moves with it but maintains it's new relative position.
That's the basics of using parenting. There are just a few more things to be aware of:

When you make a layer a child of another, it will always maintain the same relative position to the parent layer that it has at the current playhead position when you apply the parenting. Thus, if you have one layer move across screen, and you make another layer a child of that layer, the child will maintain a position relative to the parent based on where the parent was when you linked them - the relative positions will be different based on whether you have the playhead at the beginning of the timeline, while the parent is on one side of the screen, or at the end of the timeline when the parent has already moved across screen.

When you break a parent-child relationship (by setting the parent menu back to 'none' for the child layer) the child will not snap back to it's original position, scale, rotation, etc. Whatever position it is in when the link is broken will become it's new position. For instance, if you link two layers, scale and rotate the parent, then break the link, the child will now be scaled, rotated and positioned in the exact spot it ended up after inheriting the properties of the parent. This can be useful as a tool for positioning things, but it can also be a problem if you want to get a child back to it's original state - just make sure you set the playhead back to the point at which you linked them before you unlink them if you don't want the child changed.

A single layer can be the parent to multiple children, so that you can have groups of layers which are all affected at once by the movement of the single parent.

You can also have more than one level of parent-child relationship. For instance, Layer A may be the parent of Layer B, which is also the parent of Layer C. Layer C will be affected by any changes to either A or B in this case.

Parenting is a simple tool that allows you to create complex movement with fewer keyframes by nesting motion in groups. It has it's limitations (i.e. things like opacity and effects aren't passed to the child layers) but works well for many situations.