diff --git a/ampersand-state.js b/ampersand-state.js
index 79a742e..a9f5a69 100644
--- a/ampersand-state.js
+++ b/ampersand-state.js
@@ -15,11 +15,16 @@ function Base(attrs, options) {
     this.parent = options.parent;
     this.collection = options.collection;
     this._keyTree = new KeyTree();
-    this._initCollections();
-    this._initChildren();
+    this._initCollections(attrs, _.pick(options, 'parse'));
+    this._initChildren(attrs, _.pick(options, 'parse'));
     this._cache = {};
     this._previousAttributes = {};
-    if (attrs) this.set(attrs, _.extend({silent: true, initial: true}, options));
+    if (attrs) {
+        // omit children and collection attributes since we instantiate
+        // them with attrs during _initCollections and _initChildren
+        attrs = _.omit(attrs, function(attr, name) { return (name in this._collections) || (name in this._children); }, this);
+        this.set(attrs, _.extend({silent: true, initial: true}, options));
+    }
     this._changed = {};
     if (this._derived) this._initDerived();
     if (options.init !== false) this.initialize.apply(this, arguments);
@@ -427,19 +432,21 @@ _.extend(Base.prototype, BBEvents, {
         }
     },
 
-    _initCollections: function () {
+    _initCollections: function (attrs, options) {
         var coll;
         if (!this._collections) return;
+        options || (options = {});
         for (coll in this._collections) {
-            this[coll] = new this._collections[coll](null, {parent: this});
+            this[coll] = new this._collections[coll](attrs ? attrs[coll] : null, _.extend({parent: this}, options));
         }
     },
 
-    _initChildren: function () {
+    _initChildren: function (attrs, options) {
         var child;
         if (!this._children) return;
+        options || (options = {});
         for (child in this._children) {
-            this[child] = new this._children[child]({}, {parent: this});
+            this[child] = new this._children[child](attrs ? attrs[child] : null, _.extend({parent: this}, options));
             this.listenTo(this[child], 'all', this._getEventBubblingHandler(child));
         }
     },
diff --git a/test/full.js b/test/full.js
index e6eaab2..86418cb 100644
--- a/test/full.js
+++ b/test/full.js
@@ -940,6 +940,59 @@ test('children and collections should be instantiated', function (t) {
     t.end();
 });
 
+test('parent instantiation with children', function (t) {
+    var Widget = State.extend({
+        props: {
+            title: 'string',
+            size: 'string'
+        },
+        parse: function(attrs) {
+            attrs.title = attrs.serverTitle;
+            delete attrs.serverTitle;
+            return attrs;
+        }
+    });
+    var Parent = State.extend({
+        children: {
+            widget: Widget
+        }
+    });
+    var parent = new Parent({ widget: { serverTitle: 'foo', size: 'lg' } }, { parse: true });
+
+    t.equal(parent.hasChanged(), false, 'parent should not register as having changes');
+    t.equal(parent.widget.hasChanged(), false, 'child should not register as having changes');
+    t.equal(parent.widget.title, 'foo', 'child should be instantiated with parse option same as parent');
+    t.end();
+});
+
+test('parent instantiation with collections', function (t) {
+    var Widget = State.extend({
+        props: {
+            title: 'string',
+            size: 'string'
+        },
+        parse: function(attrs) {
+            attrs.title = attrs.serverTitle;
+            delete attrs.serverTitle;
+            return attrs;
+        }
+    });
+    var WidgetCollection = Collection.extend({
+        model: Widget
+    });
+    var Parent = State.extend({
+        collections: {
+            widgets: WidgetCollection
+        }
+    });
+    var parent = new Parent({ widgets: [{ serverTitle: 'foo', size: 'lg' }] }, { parse: true });
+
+    t.equal(parent.hasChanged(), false, 'parent should not register as having changes');
+    t.equal(parent.widgets.at(0).hasChanged(), false, 'collection models should not register as having changes');
+    t.equal(parent.widgets.at(0).title, 'foo', 'collection models should be instantiated with same parse option as parent');
+    t.end();
+});
+
 test('issue #82, child collections should not be cleared if they add data to themselves when instantiated', function (t) {
     var Widget = State.extend({
         props: {