There are several factors to consider in relative adoptions:
In most states, relative adoptions are treated somewhat less formally than non-relative ("stranger") adoptions. They may require only an abbreviated homestudy, or none at all. For this preferential treatment to apply, the adoption must fit the definition of a relative adoption under state law. Most state laws define "relative" by degree of relatedness. For example, Arizona adoption law defines a "relative" as "uncle, aunt, adult sibling, grandparent or great-grandparent of the child of the whole or half-blood or by marriage or adoption." Not fitting in this general definition are cousins of any degree or children of nieces or nephews. You will need to consult your attorney or the specific law in your state.
For more information specific to Grandparent Adoption and more options available to those who are caring for related children, including adoption, guardianship, legal custody, and open adoptions, see Legal Options for Relative Caregivers.