This property was in rough shape, so I tackled the essentials: new roof, plumbing fixes, and updating the interior to make it livable again.

This property was in rough shape, so I tackled the essentials: new roof, plumbing fixes, and updating the interior to make it livable again.

I agree with Aristotle-get paperwork in order now to ensure when the time comes, you have less to deal with.

Consulting a tax advisor or 1031 Exchange expert is essential to determine if the benefits outweigh the hassle.Taxes Without a 1031: Without the exchange, your parents will owe capital gains taxes.

Even the most meticulously crafted plans can frequently go off track due to unmet responsibilities or unforeseen events.This is the essential characteristic of the real estate industry.

It doesn't sound like that has happened here because you keep saying you want to transfer it etc...essentially you want to give them the property, because right now today they do not own it and have not completed AP...you're doing their job for them. 

We have an insurance policy on the rental house (through State Farm), that includes a personal liability section, which is essentially equal to our current net worth.Given that a tenant could sue for more than this if an accident occurred, we are thinking about adding either LLC or an umbrella policy (or both) as extra protection.Any advice on which way to go, and if LLC, any recommendations for a law firm or company the Indianapolis area?

Your answer is first in the paperwork you two agreed to, then in any options available if no paperwork was done. 

It is easy for people to download fake W2s, ESA paperwork, etc, with a few mouse clicks and a credit card. 

We also use Rental Guardian and add the charge to each booking so essentially the guest is paying for their own damage insurance.