(MONEY Magazine) – Just moments after their second child was born on a July night three years ago, Kari and Jeff Porter began to suspect that something was awry. Their baby, a blond, blue-eyed girl they named Abby, hardly cried at all and seemed lethargic even for a newborn. Jeff and Kari joked, a little nervously, that if Abby was going to be so quiet, they'd have no problem balancing the demands of an infant and those of their toddler son Jake.

Twelve hours later, though, still weak and unable to eat, Abby was sent to intensive care. And at three days old, she was transferred to Denver's Children's Hospital, where she could be seen by more specialists. The Porters soon had an answer from the neurologist and the geneticist who examined Abby: She seemed to have a disorder called Prader-Willi syndrome (PWS). The diagnosis, later confirmed by tests, meant Abby was in no immediate danger--but also that her entire life would be circumscribed by serious physical and mental disabilities.

The months that followed were a frenzy as Jeff and Kari, both 32, consulted with doctors, pored over Prader-Willi websites and generally reconfigured their lives to make sure Abby got top care. Money issues loomed. Jeff, in fact, had been out of work for six months. But finances took a back seat to more immediate concerns.

Only now, three years later, do the Porters feel that they're meeting the day-to-day demands of Abby's condition--and that they can begin to address the monumental long-term financial questions they face. Experts say the total cost of the care and support that Abby is likely to need as an adult could exceed $500,000. And that figure assumes a best-case scenario: that government benefits will cover most of her major costs, including housing, food and medical; that government programs now under financial strain won't change; and that Abby will never require experimental therapies not covered by insurance or government benefits.

The Porters also need a plan for balancing the costs of Abby's care with their other financial goals. And they must tackle these issues without really knowing what kind of life is in store for their daughter. "Will Abby go to college? Or a group home?" wonders Jeff. "I'm planning for the unknown."

People with Prader-Willi syndrome, which is caused by a genetic defect found in one of every 15,000 Americans, typically have low IQs, learning disabilities and behavioral problems. Usually they are short in stature, have little muscle tone and, between the ages of three and six, develop a continuous and uncontrollable urge to eat that lasts the rest of their lives, often leading to morbid obesity. A few high-functioning individuals are able to attend college and hold jobs. But nearly all PWS adults live with family, with 24-hour caretakers or in supervised group homes where it's easier to control food issues.

Jeff and Kari had differing reactions to the diagnosis. Kari didn't leave their Castle Rock, Colo. home for a week after returning from the hospital, and when well-wishers phoned she was unable to talk about Abby without crying. "I was devastated. I thought it was the end of the world," she says. "It was irrational, but I wondered, 'Why me? What horrible things did I do to have this happen?' It was very hard for me to accept."

By contrast, Jeff channeled his feelings into an energetic, almost compulsive quest to learn about PWS. Worried that they would get misleading information, Abby's doctors had warned the Porters away from the Internet. But Jeff began scouring PWS discussion groups and e-mailing parents and counselors even before Abby was home from the hospital. "I needed to find out what we were in for," he says.

Jeff's research didn't, however, prepare him and Kari for what they saw a few months after Abby was born, at an event organized by the local chapter of the Prader-Willi Syndrome Association. Ten or so families gathered for a pool party at a local community center. Most of the kids were older than Abby, so for the first time the Porters came face to face with PWS symptoms they'd only read or heard about--in other words, with Abby's future. Most of the kids obviously had serious intellectual deficiencies. Several were severely overweight. And the kids constantly interrupted their parents' conversations with "I'm hungry" and "When can we eat?" For Kari, the experience was sobering. "It drove home the reality that our daughter was never going to be a normal child," she says.

Still, Jeff and Kari found reasons to be encouraged. They spoke to a teenager who worked at Burger King and another who was babysitting. Jeff met a man close to his own age with PWS who lived in an apartment with a caretaker and worked at Wal-Mart. It also occurred to Jeff that many of the older kids hadn't benefited from an early diagnosis or from the growth-hormone treatments Abby was getting, which were only approved by the Food and Drug Administration in 2000. "If this is the worst we'll be facing," he thought, "we'll be okay."

And for the most part they have been. So far Kari and Jeff's biggest frustration has been the short fuse that's so common in PWS kids. Example: One day this past May Abby was happily playing on her backyard swing set when she launched into a tantrum because she wanted another trip down the slide--even though no one had suggested she couldn't have one. "We call her the explosive child," says Kari. Most toddlers have meltdowns, of course, but Abby's tend to be more frequent, more inexplicable and more extreme.

Balancing Abby's needs with the rest of their lives has also been a challenge. Kari and Jeff try not to give short shrift to Jake, now 4½, even though Abby requires more time and attention. So both make a point of spending time alone with him.

Meanwhile, Abby hasn't yet shown any appetite problems, though they're inevitable. And her 10 hours a month of physical and speech therapy seem to be paying off. Her doctors, says Kari, "are amazed at her progress." In September she will begin special-ed classes at the nearby public preschool.

Jeff hadn't been worried when, six months before Abby's birth, he lost his job as an information technology executive to the Internet downturn. He would be getting $67,000 in severance, which would buy him time with Jake before the new baby arrived and a chance to be selective about his next job. But with Abby's birth and the realization of how much care she'd need, he no longer had the luxury of sifting through employment opportunities.

Jeff quickly accepted a $118,000-a-year business development job at Dex Media, a Yellow Pages company in Denver. It wasn't the job he wanted, and it paid less than half the $300,000, including bonuses, he'd been making. But the health plan covered Abby's hormone shots, which would otherwise have cost $20,000 a year. He would also have more flexible--and reasonable--hours than at his last job, where 50- to 60-hour workweeks and three to four days a week of travel had been the norm.

The pay cut hurt more than the Porters expected. Insurance premiums at Jeff's new job shot up after he joined, from $100 to $400 a month. Co-pays for therapy, doctors and prescriptions were topping $250 a month. Then they learned that Kari was expecting a third child, due shortly after this story went to press.

All this forced the Porters to rethink their finances. Kari had cut back her website development work to part time when Jake was born and had been planning to quit altogether when their second child arrived. But, she says, "our plans were based on money we didn't have." So she kept up the part-time gig and then, last year, launched a home-based Web-consulting business, which will bring in about $20,000 this year. She works two half-days a week while a caregiver watches Abby and Jake, and squeezes more work in when the kids are asleep. "We couldn't meet our expenses without Kari's income," says Jeff.

None of this, however, addressed the family's long-term financial needs. This isn't unusual. According to a survey by MetLife, 60% of parents of special-needs children don't expect them ever to achieve financial independence. Yet only 10% to 20% have tackled the consequent financial issues. "People get so focused on the special-needs individual that they don't think about the financial needs of other members of their family or their own goals," says John Parise of Lincoln Financial Advisors in Cherry Hill, N.J. Parise and partner Michael Byrne are financial planners who specialize in families with special-needs members. At MONEY's request, they looked at the Porters' finances in May.

Some recommendations the Porters got from Byrne and Parise apply only to the parents of special-needs children, others to all parents. The first falls into the former category: The Porters must set up a special-needs trust (see the box at right) and designate a trustee. If Abby has as little as $2,000 of assets in her own name, she could later be disqualified from critical government benefits she'll need as an adult, when she'll no longer be covered by her parent's private health insurance.

Like all parents, the Porters need to draw up wills. And they should designate the special-needs trust, rather than Abby, as a beneficiary. In Colorado, as in many states, if either Jeff or Kari were to die without a will, the money would go half to the surviving spouse and half to the children--which, again, could disqualify Abby from certain benefits. The same goes for designating beneficiaries for life insurance policies. (That's not the case with 401(k)s or IRAs, though, which take an immediate income tax hit if left to a trust; the Porters will name their other kids as inheritors of the retirement plans.)

As part of drawing up their wills, Kari and Jeff also have to assign guardians. "This is where most families get stuck," says Byrne. "There is no perfect person who can care for your kids the way you do, especially ones with special needs." He suggests picking a guardian who is young enough to outlive the responsibility and who shares your values. To create a system of checks and balances, the designated guardian and the special-needs trustee should not be the same person. Though a guardian doesn't have to be a family member, Jeff and Kari and her sister and brother-in-law have agreed to act as guardians for each other's children.

Although Jeff has about $600,000 worth of life insurance through his job, the Porters need to beef up their coverage. He should use a term life policy to increase his total benefit to $2 million, which could replace his earnings if he were to die. Parise and Byrne usually don't recommend life insurance for a spouse who doesn't work outside the home or who works only part time, but because Kari is the primary caregiver for Abby and the other kids, they recommend she get a $1 million term policy. At their age, the additional coverage should cost Jeff and Kari just $160 a month.

The Porters hope to pay for college for their children as well as fund their own retirement. They need to set up 529 plans for college savings and boost the amount Jeff puts into his 401(k). Byrne and Parise also suggest regular investments beyond the 529 and 401(k). "We want to make sure they have some assets that are accessible without penalties," says Byrne.

To accomplish all this, the Porters are going to need to save an additional $3,000 or so a month to meet their goals--$1,000 for the 529 plans, $575 for Jeff's 401(k) on top of what he already contributes, and $1,000 for a separate investment account, plus $500 toward the trust fund for Abby. The alternative is making some hard choices about what they can accomplish.

A promotion that Jeff received at the end of May, which added $12,000 to their annual income, is a start. But the Porters admit the numbers are intimidating. They plan to start small, putting $100 toward each goal. They're committed to cutting their costs even more by reducing their spending on clothes, gifts, home decorating and entertainment. And they hope that Jeff's earnings will continue to rise. "This is doable. We knew these were the things we needed to do but we didn't have a plan," says Kari. "Now we do."

The Porters need to cut spending and save more--not only to cover the cost of caring for a child with a lifelong disability, but also to reach their other financial goals, like funding college and their own retirement.