Ms Damond, 40, was shot dead by Minneapolis police officer Mohamed Noor in 2017 after she called 911 to report a possible rape in an alley behind her home.

Noor was found guilty in a Minneapolis court in April of third-degree murder and second-degree manslaughter and was sentenced to 12.5-years' prison.

The family filed a $US50 million civil lawsuit last year and just days after Noor was found guilty by the jury in the criminal trial the city of Minneapolis agreed to pay $US20 million.

Minneapolis District court Judge Mary Vasaly on Tuesday approved the settlement to Ms Damond's brother Jason Ruszczyk and father John Ruszczyk.

Ms Damond's fiance Don Damond will also receive $US1 million.

John Ruszczyk told the court although Mr Damond was not legally next-of-kin the family wanted him to receive some of the settlement.

The couple was set to marry in a ceremony in Hawaii just weeks after the shooting and his devastation at losing his future wife was evident when he testified at the trial.

The family's Minneapolis lawyer, Robert Bennett, will receive $US4.9 million in legal fees and two other lawyers will pocket $US700,000 each.

The Minneapolis Foundation will also receive $US2 million in an initiative aimed at ending gun violence.

Ms Damond, originally from Sydney's northern beaches, moved to Minneapolis after falling in love with Mr Damond after they met at a Colorado retreat.

She was setting up her business in Minneapolis so took his surname before the wedding.

Ms Damond was home alone late on the evening of July 15, 2017 when she heard a woman's screams behind her home.

When Noor's police vehicle arrived in the alley Ms Damond approached.

Noor said he feared an ambush and made a split-second decision to shoot across his partner in the front seat and out the driver's side window, fatally hitting Ms Damond, who was wearing a pink t-shirt and pyjama pants.

Australian Associated Press