If your children (or grandchildren) are not old enough to legally own your IRA as a beneficiary, the courts will determine who controls the account until they are old enough to own it themselves, usually 18 years of age.
We recently encountered a situation where our client, Jane, a woman of modest means with both a son and a daughter, wanted her daughter’s children to receive the daughter’s share of her IRA account in the event she passed. She wanted her son to be the financial guardian of the grandchildren’s accounts, because there were obvious problems with the daughter’s capabilities.
To make sure Jane’s wishes were acknowledged and her daughter didn’t gain control of the grandkids’ inheritance from grandma, Jane’s attorney added language to her will that clearly stated her intension to leave the grandkids’ uncle as the guardian of her IRA bequests to them.
There may be some IRA custodians will allow you to name the financial guardian, but it is still prudent to include the instructions in the estate planning documents, especially the will, which gets the ear of the courts.