You don’t even need to do it for illiquid assets, the important bit is to have appreciating assets.

You avoid taxes by not getting cash in a tax inefficient way (income, capital gains) and instead you get it in loans (which can be tax deductible!)

Then when an event happens that allows you to pull cash efficiently (capital losses, inheritance asset step up etc) you service the loan.

Your lender is happy to do this both because the loans are fully backed by real assets and they want to sell you or your businesses other services.