Choosing your maid- or matron-of-honor should be done with careful thought and consideration for what the task entails.
First, if the lady (or guy!) you are choosing is single, then they are considered a maid-of-honor.
If she (he) is married, they are your matron-of-honor.
Secondly, there is no rule that this title be a family member.
This title is one that is give to someone who you love, loves you and whom you trust to help you not only on your wedding day, but to be there at very single step of the wedding planning.