Beneficiary designation forms can be an easy way to distribute many financial assets to your heirs; however, complications may lurk behind the apparent simplicity, according to Wealth Management in "Designating a Beneficiary -- Not as Easy as it Looks."
The problem is that the financial institution holding the account wants it to be as simple as possible for it to find and distribute assets to the designated beneficiary. Ideally the account will pass to one individual who is clearly identified and whose locating information is available on the designation form. However, this is often far from ideal for the account holder who might want the assets in the account to be divided between multiple beneficiaries or to several trusts. Quite often, the goals of the account holder conflict with the desires of the applicable financial institution. Other complications involve the differing tax treatment of certain assets as well as the potential adverse tax consequences of naming certain beneficiaries.
An experienced estate planning attorney can advise you on the best use of designating beneficiaries and the potential dangers to an estate plan.
Reference: Wealth Management (April 23, 2018) "Designating a Beneficiary -- Not as Easy as it Looks."