diff --git a/omegaconf/basecontainer.py b/omegaconf/basecontainer.py
index 8cec4327e..f7dcf9d9a 100644
--- a/omegaconf/basecontainer.py
+++ b/omegaconf/basecontainer.py
@@ -352,7 +352,12 @@ def expand(node: Container) -> None:
                 is_structured_config(dest._metadata.element_type)
                 and not missing_src_value
             ):
-                dest[key] = DictConfig(content=dest._metadata.element_type, parent=dest)
+                if OmegaConf.is_none(dest, key):
+                    dest[key] = DictConfig(
+                        content=dest._metadata.element_type, parent=dest
+                    )
+                else:
+                    dest[key] = DictConfig(content=dest_node, parent=dest)
                 dest_node = dest._get_node(key)
 
             if dest_node is not None:
diff --git a/tests/test_merge.py b/tests/test_merge.py
index 70aaefa7a..cb5222ef9 100644
--- a/tests/test_merge.py
+++ b/tests/test_merge.py
@@ -181,6 +181,13 @@
             id="inter:node_over_node_interpolation",
         ),
         # Structured configs
+        (
+            (
+                DictConfig({"user007": User("bond", 7)}, element_type=User),
+                {"user007": {"age": 99}},
+            ),
+            {"user007": {"name": "bond", "age": 99}},
+        ),
         (({"user": User}, {}), {"user": User(name=MISSING, age=MISSING)}),
         (({"user": User}, {"user": {}}), {"user": User(name=MISSING, age=MISSING)}),
         (