Lily Benton is the autistic child of Laurel Banning and Denny Benton. Laurel embezzled thousands of dollars from the Mason Foundation, a charity headed by Natalie Dillon, to pay for the expensive care and schooling of her daughter. Later, when Laurel and attorney Jackson Montgomery became a romantic item, Jackson became aware of Lily. Upon the death of Denny -- he was killed while trying to assault Laurel -- Jackson formally adopted Lily. Tragically, Laurel was also killed a short time later by a stray bullet.
Lily remained out of sight for several years. In 2004, Lily planned to run away from her school. As part of an agreement, Lily agreed to go live with Jackson -- and her new extended family, that also included stepbrother, Reggie Montgomery. A decision was made to "mainstream" Lily, a move that enrolled her in the public school system. Lily managed to adapt surprisingly well -- until she was harassed by a trio of "mean girls." The girls took pleasure in making fun of Lily and even tricked her into doing their math homework. When they spiked Lily's drink with alcohol, Lily innocently revealed to Jackson that the girls had given her the alcohol. The girls were livid and set out to get revenge, by spray-painting her with red paint. Aidan Devane came to Lily's rescue and it resulted in Lily developing her very first crush. Lily Montgomery would later ask him to be her "boyfriend." Jackson was livid and confronted Aidan about his interests in his daughter. Everything was quickly cleared away when it was revealed that it was Lily that had developed the crush on Aidan - not the other way around. Aidan accepted Lily's request to be her boyfriend, a role that Lily said would only require his being there to talk and play math games.
Aidan hoped to be a positive influence and help Lily, agreed. Soon, Lily's feelings turned romantic and she asked Dani and Erica for advice. Lily wanted to kiss Aidan and be real boyfriend/girlfriend. Aidan tried to get Lily to understand that nothing could happen between them, but it didn't work. Lily saw Aidan kissing Anita. Hurt and confused, Lily ran away to the Wildwind barn, where she witnessed the murder of Edmund Grey. Before Lily could do anything, the barn caught on fire and Lily would have died, had it not been for Aidan.
Afterward, Lily was in a traumatic state and retreated back into herself. Not even Jackson or Reggie could seem to make things better. And what was worse, Lily seemed to have witnessed the murder and knew who the killer was! While all of Pine Valley thought Zach Slater had been the one to kill Edmund, Lily slowly began to reveal that it had actually be one of Ryan's brothers-though she didn't say which. It was around this time that everyone began to suspect Braden Lavery of poisoning Greenlee and of killing Edmund. Worried about his children, Jackson sent them with one of Aidan's friends. They were supposed to go to Lily's old school, but were stopped when a tire blew.
Greenlee and Lily took cover among the trees. Moments later, they heard a noise and went to see what the matter was. Steve was gone, but Jonathan Lavery was there-and he had a gun. Jonathan told Greenlee that it was all apart of a plan to help Ryan. He would hold the girls and make Braden pretend he was on his side. Things ended horribly when a bomb went off in the cave, leaving Jonathan dead -- but everyone else was unharmed.
Lily met Sam Grey, Edmund's son, and the two formed a friendship. Sam found himself fascinated and enchanted by Lily and her unique way of looking at the world. Sam made his attraction for Lily known. Lily, despite her normal fear of touch, agreed to let Sam kiss her. Lily enjoyed the kiss and found herself developing "butterflies in her stomach" when she was with Sam. Lily asked Sam to be her boyfriend and he agreed.
Following Ryan Lavery's presumed death, Lily ran into Ryan, whom she believed was a ghost. In actuality, Ryan was alive and faking his death. Ryan and his co-conspirator Zach lied to Lily that Ryan was a ghost, so Lily would not reveal the truth to Ryan's widow Greenlee.
While at Wildwind with Sam, Lily believed that she saw a ghost and wondered if it was Sam's father Edmund. Sam, still fresh off the hurt of losing his father, was angry at Lily for suggesting that there were such things as ghosts. Lily was hurt by Sam's harsh words, but he eventually apologized and the two made up. Lily was proven right when the "ghost" turned out to be Julia Santos Keefer, Sam's aunt on the run from the Witness Protection Program.
Lily was shocked when Jonathan returned to town, very much alive. Jonathan explained that he had a brain tumor which was responsible for his violent behavior, and the tumor had since been removed. Jonathan was cleared of all outstanding criminal charges due to mental defect. Despite being trepidations at first, Lily began to believe that Jonathan had changed and developed a friendship with him. Jack was firmly against this and forbid Lily from seeing Jonathan. Sam, furious that Lily was associating with the man that killed his father, angrily berated Lily for it. A hurt Lily broke up with Sam.
Lily continued her friendship with Jonathan, and the two soon decided to be boyfriend and girlfriend. Lily wasn't sure if she was in love with Jonathan at first, but soon decided that she did love him. Unfortunately, Jack was determined to separate the two, and sent Lily back to her special school shortly before she turned eighteen. Lily snuck off the train, though, and ended up in New York City, where she nearly fell victim to a thug named Terry who attempted to get intimate with her. Luckily Jonathan showed up just in time, and the two of them were married by a justice of the peace, and returned to Pine Valley as husband and wife.
Lily's happiness with Jonathan was short-lived. Jonathan began suffering headaches that stemmed from a blow to the head he'd sustained when saving Lily from Terry. Jonathan had a seizure, and recovered his cognition. Jon was about to tell Lily that he'd recovered, when Lily explained that she couldn't handle it if either of them changed. Lily hugged Jonathan, and a visibly moved Jonathan made a decision to keep his recovery from Lily. Jackson overheard Jonathan speaking normally to Erin and realized that Jonathan was deceiving Lily. In an effort to keep Lily and Jonathan apart, Jack decided to have Lily declared incompetent and then have her marriage to Jonathan annulled. When Lily became overwhelmed, Jonathan called a halt to the competency trial and told Lily the truth. A devastated Lily dumped Jonathan.
Looking for someone who would match her, Lily began chatting online with a teenager in New York using the handle "Asperger Boy." Lily agreed to meet with Asperger Boy and found herself in real danger. The supposed teen was actually a very adult predator named Terry McDermott. Jonathan arrived just as Terry was poised to rape Lily, and he saved a catatonic Lily. Jackson accepted that Jonathan was a changed man, and that Jonathan genuinely loved Lily... but it was too late. Lily emerged from her catatonic state and wanted nothing more to do with Jonathan.
Lily was traumatized by her experience with Terry, and it took some time for Lily to recover. Lily started to move on with her life and got a job at Cambias as Zach's assistant. Lily came to understand why Jonathan had lied to her, and made peace with her ex-husband. She did not, however, understand what was about to happen next. Ava Benton, Lily's half-sister, arrived in town. Lily was thrilled to have a biological sister, and she and Ava quickly got close. Lily, who had repeatedly stated that she missed the Jonathan who was impaired, was nonetheless upset to see her Jonathan and her newly found sister kissing.
Things between Ava and Jonathan didn't last very long. Ava left town to pursue a career as a model and Jonathan headed to Europe. Lily, meanwhile, headed off to college at M.I.T.