The answer depends on what transmission and transfer case you have. Naturally, any automatic transmission should be placed in Park, because the fluid pump works off of the input shaft.

However, some transfer cases (like the Dana 300 in my CJ7)shouldn't be run more than 50 miles or so in neutral. This is because the t-case gears are splash lubricated - and on the D300 the splash is created by the input gears, not the rear output gears (which are too high in the fluid level) which won't create the proper splash for gear-lubricating. If I had a manual tranny, I could put the t-case in 2WD and the tranny in neutral. The rear wheels would cause the t-case output gears to spin, that would cause the t-case input gears to spin and splash lubricate the t-case.

However, I have an automatic ranny, so it must be placed in Park to prevent it from turning. So the t-case can't be left in 2WD.

So for me, if I'm making a short, less-than-50-miles, trip, I would just put the tranny in Park and the t-case in neutral. If I was making a longer trip than that, I'd have to disconnect the rear end of the rear driveshaft.

That was a major PITA. So, when I converted the rear axle to a full floater with lock-out hubs, I gained a big advantage for flat-towing. Now, I just unlock all four hubs and tow away. Just gotta remember to engage the rear hubs before disconnecting the tow bar, else the Jeep coasts away!! (g)