When a child's biological parents are not fit caretakers, it is important that the child is given a new living location and new guardians. The Children's Bureau Express says that the state law always prefers these children to be in the care of a relative, such as a grandparent or an aunt or uncle. Sometimes these arrangements will fall under formal foster care arrangements, but other times this isn't the case. In a transfer of guardianship, the new caretaker of the child will be responsible for financial obligations, and will need to work through a strained relationship with the biological parents and a limited authority to act on the child's behalf. In some legal situations, the biological parents will need to sign documents even though they are not the primary caretakers.

Because of these complications, there may be situations where it is in the best interest of the child and the related guardian to perform a formal adoption of the child. This means that all parental authority and legal rights of a parent would be transferred to this new caretaker. Kinship adoptions are the legal process of passing custody of a child from one relative to another. Unlike a typical adoption, the child and the new parent in the adoption are blood-related. Examples of this would be an aunt and uncle who adopt their niece and nephew as their own child, or a grandparent who legally adopts his or her granddaughter and grandson. Adoption laws vary from state to state, but some rules apply on all levels.

In every state the government must recognize the termination of the former parent's custody of the child, and must issue a new birth certificate and adoption records which are sealed with accordance to the state laws. The biological parents will no longer have jurisdiction or custody of their children on any level, and the new parents are regarded as their legal mother and father. Individuals may choose to adopt a close relative's child in order to keep that young one within the extended family. That way, grandparents, aunts, uncles, and other close relatives will be able to watch that child grow up. If the child is merely in the care of another relative, and is not legally adopted, it can cause major strife between family members, and confusion for the child concerned. Because of these tensions, it is recommended that one makes a kinship adoption legal and keeps the adoption open. This way former parents are allowed to communicate with their children, but the new and legalized parents will have all rights over the child.

Adoption.com recommends that children undergoing a kinship adoption process are given clear and coherent communication about their situation. Depending on the age of the child, a kinship adoption could drastically affect the child. Kinship adoption is normally treated more informally than an adoption between strangers. This means that social workers are normally less involved, and home study inspections are short and simple. The best way to determine whether or not you are a legal "relative" in your adoption case is to consult a family law attorney. Each state has a specific definition as to what qualifies as a "relative adoption." In Arizona, for instance, an uncle, aunt, adult sibling, grandparent, or great-grandparent of the child by whole or half-blood or by marriage or adoption qualifies for a relative adoption. In this state, cousins and nieces and nephews do not count as legal relatives. In some states, a step-parent adoption is dealt with differently than a relative one, so you will want to consult your attorney regarding this distinction.