Cash equivalents such as savings and checking accounts, CDs, money market funds and other similar assets are best. However, these type of assets usually represent a relatively small portion of someone’s estate. A home can also be used to fund a trust, although it is less liquid and the value is subject to the existing market. Life insurance is not subject to ordinary income tax and the death benefit is known, so it is often the preferred method. Retirement assets are usually tax-deferred, making them subject to the harsh tax schedule applied to special needs trusts and therefore considered to be one of the least preferable methods of funding a trust.