As somebody who streams sometimes too I found it annoying I couldn't set my custom thumbnail. Instead the stream was represented by whatever random image my PS4 and YouTube decided to assign to it.
Now yes I could edit the thumbnail after the streaming was done, but whilst it was ongoing I wasn't able to. I've searched a lot for an answer to this but found none that dealt with live streams.
Well I found out how to do it a few days back. So for those who do use their PS4 for streaming sometimes or are thinking about it this video will show you how to have custom thumbnails for your *active* streams direct from console.
I assume this applies equally to Xbox as it does PS4.