Greg Matters would have turned 41 on Friday, and his family said the decision by Veterans Affairs to award the honour gave them comfort as they marked his birthday without him.
"It is a difficult day for us," his sister, Tracey Matters, said in an interview from her home in Australia.
In Prince George, B.C., she said the rest of her family was planning a celebration of Greg's life.
"My mom ... is quite upset, quite distraught, but she's planning a family get together and a birthday party for Greg and that's what he would have liked," Matters said.
Two days prior, the family received a letter from Veterans Affairs informing them that they will receive the cross.
An official said the department could not comment on a specific case for privacy reasons, but she confirmed the circumstances for awarding the honour.
"The family of any veteran whose death is attributable to their service is eligible for the Memorial Cross," Janice Summerby said in an email response to a request for an interview.
Matters was a soldier for 15 years and served in Bosnia before leaving the forces in 2009.
He was receiving treatment for PTSD when he was fatally shot by a member of an RCMP emergency response unit during an incident on his rural property near Prince George, B.C., last September.
In an email sent to the local newspaper prior to the fatal confrontation, Matters wrote of his struggles and a dispute with a family member.
His family said he was not armed and his death is under investigation by the province's Independent Investigations Office, which looks into police-involved fatalities in B.C.
Tracey Matters received word Friday that the office expects to complete its investigation by the end of the month, and plans to meet with her family to discuss the findings.
Whatever the decision, it will allow them to move forward and grieve their loss, she said.
Post-traumatic stress has been an ongoing issue for the Canadian Forces, but it has gained greater recognition in the aftermath of the war in Afghanistan.
In his eulogy, the doctor treating Matters for PTSD described the events that affected him, from bullying in the military to the genocide he witnessed in Bosnia.
Matters returned with a sense of mistrust for those in positions of power, Dr. Greg Passey said in the eulogy provided to The Canadian Press by the Matters family.
"He returned home only a shell of the man who had left to join the military with such high ideals," he told mourners.
Tracey Matters said she hopes her brother's story may convince other soldiers to come forward.
"I hope that through what my brother and what my family has been through, that other soldiers, veterans and their families know that they're not alone and they can seek help," she said.
-- By Dene Moore in Vancouver