Naming the beneficiary of your retirement account needs special consideration when making your estate plan, according to Morningstar in "Do's and Don'ts for Beneficiary Designations."
There are actually many things to consider when naming beneficiaries on retirement accounts. This is because different beneficiaries are treated differently for tax purposes and in the way they can use the account.
Generally speaking, none of this is considered when you are setting up the retirement account but certainly should be at the time of estate planning.
Among the things that should considered, is how your designated beneficiary will receive the account and the fact that the beneficiary is under no obligation to share with other people, even if you tell them they should. Therefore, if you have three children and name only one of them as a beneficiary, then you might not want to split the rest of your assets evenly between all three children.
An estate planning attorney can guide you in creating a plan that meets your family’s specific circumstances.
Reference: Morningstar (July 23, 2017) "Do's and Don'ts for Beneficiary Designations."