We have open and funded an ILIT with our son as ILIT Trustee. The $1M life insurance is a 2nd-to-die type policy. Wife & I on annual basis make equal withdrawals from each of our IRAs and “gift” the amount of policy premium to ILIT. We pay taxes on IRA withdrawal. ILIT Trustee issues Crummey Letter (for IRS records) and after wait period pays life insurance premium.

Question: Since our son is both ILIT Trustee and beneficiary of ILIT, does the “gift” to ILIT for insurance policy premium count as part of the $14,000 single/ $28,000 husband & spouse IRS Rules limitation on annual tax-free gifting?