You don't use all your assets as a collateral – you loan out, say, 1%, for the needs you have. If the creditor demands a repayment for some reason – and if you're still solvent, it's not like your IOU can't be treated as money in itself – then you can get a loan on some other 1% of your now-appreciated assets, use that to repay the first loan. All without liquidating any assets and accruing any “income”. Then pass the bucket to whoever inherits your assets.

You can presumably go a layer deeper and use the loaned cash to build an investment portfolio with a rate of return sufficient to fund your lifestyle, pay the interest on the original loan, and pay for the management of the whole thing.

> Don't they have to payback the loans at some point?

LOCs are often open-ended, so as long as they're at minimum paying the interest, the lender doesn't care. Presumably it will be cleared up eventually on death with the estate.