You’ll find the Heirloom hammer behind a weak wall inside one of the cells in the Cell Circle portion of the Catacombs. This particular cell is located a couple to the left of the Infected Monk’s cell and can be identified by a number of lit candles inside. Us your shield charge to bring down the wall and loot the Heirloom Hammer from the Altar inside.
We can now take this hammer to a specific sarcophagus located in the Catacombs in order to upgrade it. The sarcophagus is located off the main junction room (the room with three exits) that links the shortcut from the Checkpoint Crystal at the very start of the Catacombs to the Royal Tomb and Mines area of the Catacombs. This particular tomb we are looking for is located in the small Mines area, in the first door on the left (there is an Audio Note (Kyle’s Sword) here if you have not already got it).