Nowadays, with the recent advances in battery technologies, cordless tools are gaining more popularity and many manufacturers have enhanced their series of autonomous devices with powerful instruments like circular saws and punches. However, the development of battery-operated tools is not an easy task and many challenging problems must be solved. The most significant of these are limited working time without recharging and controllability of the motor drives. As a result, tool manufacturers are substituting conventional universal motor drives with permanent magnet synchronous motor drives, which require more complicated electronics, but can provide the desired characteristics. In order to guarantee normal operation and satisfy safety standards, devices have to properly handle any possible hazardous situations. One of these situations is overheating of inverter switches, thus, the temperature of each transistor has to be monitored. This task is typically implemented using negative temperature coefficient (NTC) resistors, whereby voltage is sensed by analog to digital converter of microcontroller. This article proposes a software algorithm for temperature estimation and monitoring of each inverter switch, which allows excludes NTCs, decreasing overall costs and saving space on the printed circuit board. Proper operation of the developed technology is proven by the experimental results and safety certification according to UL60730.