It’s an adjective derived from the verb ‘shatter’, meaning ‘break into pieces’, ‘destroy’ ; for example, a glass window or a ceramic vase or plate will be shattered if struck by a hard object or dropped on a hard surface.
The word is used metaphorically to suggest psychological or emotional devastation caused by an event.
The past participle, used in passive mode, as you note, also functions as an adjective.
‘The shattered vase was put together again by the museum staff.’
In your example it can be seen more clearly using the synonym ‘devastated’ :
‘The devastated family reacted to Annabel’s suicide by coming closer together.’