Because a Notary is expected to serve impartially when identifying a document signer, notarizing a document for a relative or family member can raise suspicions of bias if the document is ever challenged in court.
Questions can arise if there is any suspicion that the Notary skipped proper identification procedures as a favor to a spouse or cousin, or if there is an impression that the Notary stands to receive a payment or benefit from the transaction. This kind of possible bias -- known as "beneficial interest" -- can lead to both ethical and legal problems for the Notary, the signer, and the transaction.
Many states laws strictly prohibit notarizing documents for relatives. However, what relatives are banned varies between states. Oregon prohibits Notaries from performing notarizations on documents the Notary's spouse has a direct financial or beneficial interest in. Nevada prohibits notarizing for any relative "by blood or marriage," including spouses, parents, grandparents, siblings and children (including step-relatives and adopted relatives.) Nebraska prohibits notarizing if the Notary is a "spouse, ancestor, descendant or sibling of the principal, including in-law, step or half relatives."
In a recent Nebraska court case, a bankruptcy judge ruled an Omaha bank had no valid deed to a property because the bank president who notarized it was the brother-in-law of the property owner.
Even in states that don't specifically prohibit notarizing for relatives, the NNA strongly recommends against doing so. Notarizing for a family member can bring potential claims of bias or impropriety if a legal dispute arises. Because of inheritance laws in certain states, a Notary related to a signer might be considered to have a potential benefit from a document -- such as inheriting an heirloom granted to a family member signing a document -- even if the Notary isn't directly named or involved the transaction.