Child skews when parenting

Here’s my player and the hammer I modeled:

And here’s what happens when I parent the hammer to the player:

No amount of scaling will fix this, which is to be expected, because the hammer is being skewed, not scaled.
So how can I keep this from happening?

The problem you are having there has to do with the BASE scale of the model and it’s vertices. Go back into the modelling program you used to create the hammer and uniform/reset the scale of the object. If you are using 3DS Max, select the object and go to the Utilities tab → Click ‘Reset XForm’. Now you should see a modifier added to the object. Collapse them and the scale of the vertices have now been recalculated to an object of scale (1,1,1) / (100%,100%,100%). When you try to rotate the object next time in Unity around it’s pivot, it won’t skew.

I hope this helps.