The McSkimming family, of Waimate, has chromed Mr McSkimming's well-used handpiece and mounted it on a piece of Central Otago Schist.
The trophy is to be awarded during the New Zealand Merino Shearing championships in Alexandra in September.
The recipient will receive a photo and a miniature version of the trophy to keep.
His son, Lane McSkimming, a former shearer and now a real estate agent in Wanaka, said his father died last year aged 85, and the family wanted to honour him, so they chose the handpiece to form part of the trophy.
''The trophy is his handpiece that he used for 50 years.
''What makes it special is it has holes worn in it where his thumb and palm were.
''He won a speed shearing competition with that handpiece when he was 75, in Canterbury.''
He said the recipient would be someone in the industry who had earned mana and respect, was a role model, had a passion for the industry and was someone who embodied the same principles and standards his father did.
''They will be the best of the best,'' he said.
''The memorial trophy will go to the person who will be selected by the committee, judges and family.''
Murray McSkimming was one of the biggest shearing contractors in the southern region at that time and one of the first members of the Merino Shears committee.
He won the inaugural New Zealand fine wool championships, held in Alexandra in 1962, and again in 1966 and was selected as a member of a test team against Australia.
''He loved shearing, and in particular merino shearing, and we wanted a trophy that honoured that passion.
''A lot of current top shearers had a huge respect for Dad.''
Lane McSkimming's grandfather Fred McSkimming was also a shearer and for the past 40-odd years, the top shearers in the country competed for the ''triple crown'' shearing trophy for the best all-breed shearer in the country, at the Golden Shears competitions in Masterton.
Lane McSkimming was a shearer for many years and won the Alexandra and Golden Shears senior titles in 1993, while his brother Willie is a shearing contractor in the North Island.
''Willie is among the top 10 or 20 in the country.''
He said the family hoped that in addition to the trophy, there might eventually be prize money or a trip added to the award.
''Long term we want it to become the most sought-after trophy in the country.''
Olympic yachtsman Blair Tuke, who is part of this year's Volvo Round the World race, is Murray McSkimming's grandson.
