diff --git a/pixi.lock b/pixi.lock
index 4fdf83c1a3..bdb100b6e0 100644
--- a/pixi.lock
+++ b/pixi.lock
@@ -3825,10 +3825,15 @@ environments:
       - conda: https://conda.anaconda.org/conda-forge/win-64/zstd-1.5.6-h0ea2cb4_0.conda
       - pypi: git+https://github.com/opensourceeconomics/dags#d4e4b0b268be13472444cd9e291202513d0b1bcb
       - pypi: https://files.pythonhosted.org/packages/43/f5/ee39c6e92acc742c052f137b47c210cd0a1b72dcd3f98495528bb4d27761/flatten_dict-0.4.2-py2.py3-none-any.whl
+      - pypi: https://files.pythonhosted.org/packages/f4/58/cc0721a1030fcbab0984beea0bf3c4610ec103f738423cdfa9c4ceb40598/jax-0.5.0-py3-none-any.whl
+      - pypi: https://files.pythonhosted.org/packages/2d/cb/11bb92324afb6ba678f388e10b78d6b02196bc8887eb5aa0d85ce398edf9/jaxlib-0.5.0-cp312-cp312-win_amd64.whl
       - pypi: https://files.pythonhosted.org/packages/41/90/51523adbedc808e03271c7448fd71da1660cc02603eaaf10b9ab4f102146/kaleido-0.1.0.post1-py2.py3-none-win_amd64.whl
+      - pypi: https://files.pythonhosted.org/packages/38/bc/c4260e4a6c6bf684d0313308de1c860467275221d5e7daf69b3fcddfdd0b/ml_dtypes-0.5.1-cp312-cp312-win_amd64.whl
       - pypi: https://files.pythonhosted.org/packages/b9/54/dd730b32ea14ea797530a4479b2ed46a6fb250f682a9cfb997e968bf0261/networkx-3.4.2-py3-none-any.whl
+      - pypi: https://files.pythonhosted.org/packages/23/cd/066e86230ae37ed0be70aae89aabf03ca8d9f39c8aea0dec8029455b5540/opt_einsum-3.4.0-py3-none-any.whl
       - pypi: https://files.pythonhosted.org/packages/29/93/d56fb9ba5569dc29d8263c72e46d21a2fd38741339ebf03f54cf7561828c/pdbp-1.6.1-py3-none-any.whl
       - pypi: https://files.pythonhosted.org/packages/5a/dc/491b7661614ab97483abf2056be1deee4dc2490ecbf7bff9ab5cdbac86e1/pyreadline3-3.5.4-py3-none-any.whl
+      - pypi: https://files.pythonhosted.org/packages/f5/6f/e6e5aff77ea2a48dd96808bb51d7450875af154ee7cbe72188afb0b37929/scipy-1.15.2-cp312-cp312-win_amd64.whl
       - pypi: https://files.pythonhosted.org/packages/65/44/bb509c3d2c0b5a87e7a5af1d5917a402a32ff026f777a6d7cb6990746cbb/tabcompleter-1.4.0-py3-none-any.whl
       - pypi: https://files.pythonhosted.org/packages/31/c1/d73ff5900c6b462879039ac92f89424ad1eb544b1f6bd77f12f9c3013e20/types_networkx-3.4.2.20241227-py3-none-any.whl
       - pypi: .
@@ -5339,6 +5344,26 @@ packages:
   purls: []
   size: 21903
   timestamp: 1694400856979
+- pypi: .
+  name: gettsim
+  version: 0.7.1.dev82+g6c6c0155.d20250222
+  sha256: 468d7ee73fd31c448cd102912b902342be58fb2b7298aacca19f8f4eca97a50d
+  requires_dist:
+  - astor
+  - ipywidgets
+  - networkx
+  - numpy
+  - numpy-groupies
+  - openpyxl
+  - optree
+  - pandas
+  - plotly
+  - pygments
+  - pygraphviz
+  - pytest
+  - pyyaml
+  requires_python: '>=3.11'
+  editable: true
 - pypi: .
   name: gettsim
   version: 0.7.1.dev305+gb67bbac0.d20250215
@@ -6006,6 +6031,35 @@ packages:
   - pkg:pypi/isoduration?source=hash-mapping
   size: 17189
   timestamp: 1638811664194
+- pypi: https://files.pythonhosted.org/packages/f4/58/cc0721a1030fcbab0984beea0bf3c4610ec103f738423cdfa9c4ceb40598/jax-0.5.0-py3-none-any.whl
+  name: jax
+  version: 0.5.0
+  sha256: b3907aa87ae2c340b39cdbf80c07a74550369cafcaf7398fb60ba58d167345ab
+  requires_dist:
+  - jaxlib<=0.5.0,>=0.5.0
+  - ml-dtypes>=0.4.0
+  - numpy>=1.25
+  - numpy>=1.26.0 ; python_full_version >= '3.12'
+  - opt-einsum
+  - scipy>=1.11.1
+  - jaxlib==0.5.0 ; extra == 'minimum-jaxlib'
+  - jaxlib==0.4.38 ; extra == 'ci'
+  - jaxlib<=0.5.0,>=0.5.0 ; extra == 'tpu'
+  - libtpu-nightly==0.1.dev20241010+nightly.cleanup ; extra == 'tpu'
+  - libtpu==0.0.8 ; extra == 'tpu'
+  - requests ; extra == 'tpu'
+  - jaxlib==0.5.0 ; extra == 'cuda'
+  - jax-cuda12-plugin[with-cuda]<=0.5.0,>=0.5.0 ; extra == 'cuda'
+  - jaxlib==0.5.0 ; extra == 'cuda12'
+  - jax-cuda12-plugin[with-cuda]<=0.5.0,>=0.5.0 ; extra == 'cuda12'
+  - jaxlib==0.5.0 ; extra == 'cuda12-pip'
+  - jax-cuda12-plugin[with-cuda]<=0.5.0,>=0.5.0 ; extra == 'cuda12-pip'
+  - jaxlib==0.5.0 ; extra == 'cuda12-local'
+  - jax-cuda12-plugin==0.5.0 ; extra == 'cuda12-local'
+  - jaxlib==0.5.0 ; extra == 'rocm'
+  - jax-rocm60-plugin<=0.5.0,>=0.5.0 ; extra == 'rocm'
+  - kubernetes ; extra == 'k8s'
+  requires_python: '>=3.10'
 - conda: https://conda.anaconda.org/conda-forge/noarch/jax-0.4.34-pyhd8ed1ab_0.conda
   sha256: da3880afc35042b92e0ad214beee372e41162da374dfaa8b1164db1dcee671b2
   md5: f0d3c57355acf3f06d93672e57c0c1e8
@@ -6025,6 +6079,15 @@ packages:
   - pkg:pypi/jax?source=hash-mapping
   size: 1421248
   timestamp: 1729336456855
+- pypi: https://files.pythonhosted.org/packages/2d/cb/11bb92324afb6ba678f388e10b78d6b02196bc8887eb5aa0d85ce398edf9/jaxlib-0.5.0-cp312-cp312-win_amd64.whl
+  name: jaxlib
+  version: 0.5.0
+  sha256: 5baedbeeb60fa493c7528783254f04c6e986a2826266b198ed37e9336af2ef8c
+  requires_dist:
+  - scipy>=1.11.1
+  - numpy>=1.25
+  - ml-dtypes>=0.2.0
+  requires_python: '>=3.10'
 - conda: https://conda.anaconda.org/conda-forge/linux-64/jaxlib-0.4.34-cpu_py312haec0345_0.conda
   sha256: 8e2dce1d39ccb4e6883444f71b7155168c0612d9d086b58616578448aeb33afe
   md5: 08f587f0f6505671c7715163e18b6f3a
@@ -8268,6 +8331,22 @@ packages:
   purls: []
   size: 103019089
   timestamp: 1727378392081
+- pypi: https://files.pythonhosted.org/packages/38/bc/c4260e4a6c6bf684d0313308de1c860467275221d5e7daf69b3fcddfdd0b/ml_dtypes-0.5.1-cp312-cp312-win_amd64.whl
+  name: ml-dtypes
+  version: 0.5.1
+  sha256: 9626d0bca1fb387d5791ca36bacbba298c5ef554747b7ebeafefb4564fc83566
+  requires_dist:
+  - numpy>=1.21
+  - numpy>=1.21.2 ; python_full_version >= '3.10'
+  - numpy>=1.23.3 ; python_full_version >= '3.11'
+  - numpy>=1.26.0 ; python_full_version >= '3.12'
+  - numpy>=2.1.0 ; python_full_version >= '3.13'
+  - absl-py ; extra == 'dev'
+  - pytest ; extra == 'dev'
+  - pytest-xdist ; extra == 'dev'
+  - pylint>=2.6.0 ; extra == 'dev'
+  - pyink ; extra == 'dev'
+  requires_python: '>=3.9'
 - conda: https://conda.anaconda.org/conda-forge/linux-64/ml_dtypes-0.5.0-py312hf9745cd_0.conda
   sha256: 559c14640ce8e3f2270da6130ba50ae624f3db56176fad29a5436b2dec3fc3b2
   md5: 8ca779f3f30b00181aeee820fe8b22d5
@@ -8831,6 +8910,11 @@ packages:
   purls: []
   size: 8491156
   timestamp: 1731379715927
+- pypi: https://files.pythonhosted.org/packages/23/cd/066e86230ae37ed0be70aae89aabf03ca8d9f39c8aea0dec8029455b5540/opt_einsum-3.4.0-py3-none-any.whl
+  name: opt-einsum
+  version: 3.4.0
+  sha256: 69bb92469f86a1565195ece4ac0323943e83477171b91d24c35afe028a90d7cd
+  requires_python: '>=3.8'
 - conda: https://conda.anaconda.org/conda-forge/noarch/opt-einsum-3.4.0-hd8ed1ab_0.conda
   sha256: 583cb8748a9821e301a404806da0de62e8ba01607feecf12c0ef06d8bc77077e
   md5: 73d0b1d98a9030bdefe712648af583a0
@@ -9311,6 +9395,15 @@ packages:
   - tabcompleter>=1.4.0
   - colorama>=0.4.6 ; platform_system == 'Windows'
   requires_python: '>=3.8'
+- pypi: https://files.pythonhosted.org/packages/29/93/d56fb9ba5569dc29d8263c72e46d21a2fd38741339ebf03f54cf7561828c/pdbp-1.6.1-py3-none-any.whl
+  name: pdbp
+  version: 1.6.1
+  sha256: f10bad2ee044c0e5c168cb0825abfdbdc01c50013e9755df5261b060bdd35c22
+  requires_dist:
+  - pygments>=2.18.0
+  - tabcompleter>=1.4.0
+  - colorama>=0.4.6 ; sys_platform == 'win32'
+  requires_python: '>=3.8'
 - conda: https://conda.anaconda.org/conda-forge/noarch/pexpect-4.9.0-pyhd8ed1ab_0.conda
   sha256: 90a09d134a4a43911b716d4d6eb9d169238aff2349056f7323d9db613812667e
   md5: 629f3203c99b32e0988910c93e77f3b6
@@ -10858,6 +10951,49 @@ packages:
   - pkg:pypi/rpds-py?source=hash-mapping
   size: 210974
   timestamp: 1730923229667
+- pypi: https://files.pythonhosted.org/packages/f5/6f/e6e5aff77ea2a48dd96808bb51d7450875af154ee7cbe72188afb0b37929/scipy-1.15.2-cp312-cp312-win_amd64.whl
+  name: scipy
+  version: 1.15.2
+  sha256: e7c68b6a43259ba0aab737237876e5c2c549a031ddb7abc28c7b47f22e202ded
+  requires_dist:
+  - numpy>=1.23.5,<2.5
+  - pytest ; extra == 'test'
+  - pytest-cov ; extra == 'test'
+  - pytest-timeout ; extra == 'test'
+  - pytest-xdist ; extra == 'test'
+  - asv ; extra == 'test'
+  - mpmath ; extra == 'test'
+  - gmpy2 ; extra == 'test'
+  - threadpoolctl ; extra == 'test'
+  - scikit-umfpack ; extra == 'test'
+  - pooch ; extra == 'test'
+  - hypothesis>=6.30 ; extra == 'test'
+  - array-api-strict>=2.0,<2.1.1 ; extra == 'test'
+  - cython ; extra == 'test'
+  - meson ; extra == 'test'
+  - ninja ; sys_platform != 'emscripten' and extra == 'test'
+  - sphinx>=5.0.0,<8.0.0 ; extra == 'doc'
+  - intersphinx-registry ; extra == 'doc'
+  - pydata-sphinx-theme>=0.15.2 ; extra == 'doc'
+  - sphinx-copybutton ; extra == 'doc'
+  - sphinx-design>=0.4.0 ; extra == 'doc'
+  - matplotlib>=3.5 ; extra == 'doc'
+  - numpydoc ; extra == 'doc'
+  - jupytext ; extra == 'doc'
+  - myst-nb ; extra == 'doc'
+  - pooch ; extra == 'doc'
+  - jupyterlite-sphinx>=0.16.5 ; extra == 'doc'
+  - jupyterlite-pyodide-kernel ; extra == 'doc'
+  - mypy==1.10.0 ; extra == 'dev'
+  - typing-extensions ; extra == 'dev'
+  - types-psutil ; extra == 'dev'
+  - pycodestyle ; extra == 'dev'
+  - ruff>=0.0.292 ; extra == 'dev'
+  - cython-lint>=0.12.2 ; extra == 'dev'
+  - rich-click ; extra == 'dev'
+  - doit>=0.36.0 ; extra == 'dev'
+  - pydevtool ; extra == 'dev'
+  requires_python: '>=3.10'
 - conda: https://conda.anaconda.org/conda-forge/linux-64/scipy-1.14.1-py312h62794b6_1.conda
   sha256: d069a64edade554261672d8febf4756aeb56a6cb44bd91844eaa944e5d9f4eb9
   md5: b43233a9e2f62fb94affe5607ea79473
@@ -11139,6 +11275,13 @@ packages:
   requires_dist:
   - pyreadline3 ; platform_system == 'Windows'
   requires_python: '>=3.8'
+- pypi: https://files.pythonhosted.org/packages/65/44/bb509c3d2c0b5a87e7a5af1d5917a402a32ff026f777a6d7cb6990746cbb/tabcompleter-1.4.0-py3-none-any.whl
+  name: tabcompleter
+  version: 1.4.0
+  sha256: d744aa735b49c0a6cc2fb8fcd40077fec47425e4388301010b14e6ce3311368b
+  requires_dist:
+  - pyreadline3 ; sys_platform == 'win32'
+  requires_python: '>=3.8'
 - conda: https://conda.anaconda.org/conda-forge/noarch/tabulate-0.9.0-pyhd8ed1ab_1.tar.bz2
   sha256: f6e4a0dd24ba060a4af69ca79d32361a6678e61d78c73eb5e357909b025b4620
   md5: 4759805cce2d914c38472f70bf4d8bcb
diff --git a/src/_gettsim/combine_functions_in_tree.py b/src/_gettsim/combine_functions_in_tree.py
index c3df12e330..ab912c457d 100644
--- a/src/_gettsim/combine_functions_in_tree.py
+++ b/src/_gettsim/combine_functions_in_tree.py
@@ -34,10 +34,10 @@
     format_errors_and_warnings,
     format_list_linewise,
     get_names_of_arguments_without_defaults,
+    insert_path_and_value,
     partition_tree_by_reference_tree,
     remove_group_suffix,
     rename_arguments_and_add_annotations,
-    upsert_path_and_value,
     upsert_tree,
 )
 from _gettsim.time_conversion import create_time_conversion_functions
@@ -87,8 +87,8 @@ def combine_policy_functions_and_derived_functions(
         aggregation_type="p_id",
     )
     current_functions_tree = upsert_tree(
-        base=environment.functions_tree,
-        to_upsert=aggregate_by_p_id_functions,
+        base=aggregate_by_p_id_functions,
+        to_upsert=environment.functions_tree,
     )
 
     # Create functions for different time units
@@ -97,8 +97,8 @@ def combine_policy_functions_and_derived_functions(
         data_tree=data_tree,
     )
     current_functions_tree = upsert_tree(
-        base=current_functions_tree,
-        to_upsert=time_conversion_functions,
+        base=time_conversion_functions,
+        to_upsert=current_functions_tree,
     )
 
     # Create aggregation functions
@@ -109,15 +109,15 @@ def combine_policy_functions_and_derived_functions(
         aggregations_tree_provided_by_env=environment.aggregation_specs_tree,
     )
     current_functions_tree = upsert_tree(
-        base=current_functions_tree,
-        to_upsert=aggregate_by_group_functions,
+        base=aggregate_by_group_functions,
+        to_upsert=current_functions_tree,
     )
 
     # Create groupings
     groupings = create_groupings()
     current_functions_tree = upsert_tree(
-        base=current_functions_tree,
-        to_upsert=groupings,
+        base=groupings,
+        to_upsert=current_functions_tree,
     )
 
     _fail_if_targets_not_in_functions_tree(current_functions_tree, targets_tree)
@@ -200,10 +200,10 @@ def _create_aggregation_functions(
                 annotations=annotations,
             )
 
-        out_tree = upsert_path_and_value(
+        out_tree = insert_path_and_value(
             base=out_tree,
-            path_to_upsert=tree_path,
-            value_to_upsert=derived_func,
+            path_to_insert=tree_path,
+            value_to_insert=derived_func,
         )
 
     return out_tree
@@ -269,10 +269,10 @@ def _create_derived_aggregations_tree(
         ) and tree_path not in optree.tree_paths(aggregation_source_tree)
 
         if aggregation_specs_needed:
-            derived_aggregations_tree = upsert_path_and_value(
+            derived_aggregations_tree = insert_path_and_value(
                 base=derived_aggregations_tree,
-                path_to_upsert=tree_path,
-                value_to_upsert=AggregateByGroupSpec(
+                path_to_insert=tree_path,
+                value_to_insert=AggregateByGroupSpec(
                     aggr="sum",
                     source_col=remove_group_suffix(leaf_name),
                 ),
@@ -310,9 +310,9 @@ def _get_potential_aggregation_function_names_from_function_arguments(
                 name=name,
                 namespace=tree_path[:-1],
             )
-            current_tree = upsert_path_and_value(
+            current_tree = insert_path_and_value(
                 base=current_tree,
-                path_to_upsert=path_of_function_argument,
+                path_to_insert=path_of_function_argument,
             )
     return current_tree
 
diff --git a/src/_gettsim/functions/loader.py b/src/_gettsim/functions/loader.py
index 06b842a0eb..c8a93f3053 100644
--- a/src/_gettsim/functions/loader.py
+++ b/src/_gettsim/functions/loader.py
@@ -13,7 +13,11 @@
 )
 from _gettsim.functions.policy_function import PolicyFunction
 from _gettsim.gettsim_typing import NestedAggregationSpecDict, NestedFunctionDict
-from _gettsim.shared import upsert_path_and_value
+from _gettsim.shared import (
+    create_tree_from_path_and_value,
+    insert_path_and_value,
+    merge_trees,
+)
 
 
 def load_functions_tree_for_date(date: datetime.date) -> NestedFunctionDict:
@@ -22,7 +26,9 @@ def load_functions_tree_for_date(date: datetime.date) -> NestedFunctionDict:
 
     This function takes the list of root paths and searches for all modules containing
     PolicyFunctions. Then it loads all PolicyFunctions that are active at the given date
-    and parses them into the functions tree.
+    and constructs the functions tree.
+
+    Namespaces are at the directory level.
 
     Parameters
     ----------
@@ -40,22 +46,19 @@ def load_functions_tree_for_date(date: datetime.date) -> NestedFunctionDict:
     functions_tree = {}
 
     for path in paths_to_policy_functions:
-        active_functions_dict = get_active_policy_functions_from_module(
+        new_functions_tree = get_active_policy_functions_tree_from_module(
             path=path, date=date, package_root=RESOURCE_DIR
         )
 
-        tree_path = _convert_path_to_tree_path(path=path, package_root=RESOURCE_DIR)
-
-        functions_tree = upsert_path_and_value(
-            base=functions_tree,
-            path_to_upsert=tree_path,
-            value_to_upsert=active_functions_dict,
+        functions_tree = merge_trees(
+            left=functions_tree,
+            right=new_functions_tree,
         )
 
     return functions_tree
 
 
-def get_active_policy_functions_from_module(
+def get_active_policy_functions_tree_from_module(
     path: Path,
     package_root: Path,
     date: datetime.date,
@@ -73,7 +76,7 @@ def get_active_policy_functions_from_module(
 
     Returns
     -------
-    A dictionary of active PolicyFunctions with their leaf names as keys.
+    A nested dictionary of active PolicyFunctions with their leaf names as keys.
     """
     module = _load_module(path, package_root)
     module_name = _convert_path_to_importable_module_name(path, package_root)
@@ -88,7 +91,13 @@ def get_active_policy_functions_from_module(
         policy_functions, module_name
     )
 
-    return {func.leaf_name: func for func in policy_functions if func.is_active(date)}
+    active_policy_functions = {
+        func.leaf_name: func for func in policy_functions if func.is_active(date)
+    }
+    return create_tree_from_path_and_value(
+        path=_convert_path_to_tree_path(path=path, package_root=RESOURCE_DIR),
+        value=active_policy_functions,
+    )
 
 
 def _fail_if_multiple_policy_functions_are_active_at_the_same_time(
@@ -213,41 +222,36 @@ def _convert_path_to_importable_module_name(path: Path, package_root: Path) -> s
 
 def _convert_path_to_tree_path(path: Path, package_root: Path) -> tuple[str, ...]:
     """
-    Convert a system path to a tree path.
+    Convert the path from the package root to a tree path.
 
-    The system path is the path to the python module on the user's system. The tree path
-    are the branches of the tree.
+    Removes the package root and module name from the path.
 
     Parameters
     ----------
     path:
-        The path to the python module on the user's system.
+        The path to a Python module.
     package_root:
-        The root of the package that contains the functions.
+        GETTSIM's package root.
 
     Returns
     -------
-    The tree path.
+    The tree path, to be used as a key in the functions tree.
 
     Examples
     --------
-    >>> _convert_path_to_tree_path(RESOURCE_DIR / "taxes" / "dir"
-        / "functions.py")
-    ("dir", "functions")
+    >>> _convert_path_to_tree_path(
+    ...     path=RESOURCE_DIR / "taxes" / "dir" / "functions.py",
+    ...     package_root=RESOURCE_DIR,
+    ... )
+    ("dir")
     """
-    # TODO(@MImmesberger): Simplify after changing directory structure
+    parts = path.relative_to(package_root.parent / "_gettsim").parts
+
+    # TODO(@MImmesberger): Remove the subsequent line after changing directory structure
     # https://github.com/iza-institute-of-labor-economics/gettsim/pull/805
-    # tree_path = path.relative_to(package_root.parent).parts[1:] # noqa: ERA001
-    tree_path = tuple(
-        path.relative_to(package_root.parent)
-        .with_suffix("")
-        .as_posix()
-        .removeprefix("_gettsim/")
-        .removeprefix("taxes/")
-        .removeprefix("transfers/")
-        .split("/")
-    )
-    return _simplify_tree_path_when_module_name_equals_dir_name(tree_path)
+    parts = parts[1:] if parts[0] in {"taxes", "transfers"} else parts
+
+    return parts[:-1]
 
 
 def load_aggregation_specs_tree() -> NestedAggregationSpecDict:
@@ -276,10 +280,10 @@ def load_aggregation_specs_tree() -> NestedAggregationSpecDict:
 
         tree_path = _convert_path_to_tree_path(path=path, package_root=RESOURCE_DIR)
 
-        aggregation_specs_tree = upsert_path_and_value(
+        aggregation_specs_tree = insert_path_and_value(
             base=aggregation_specs_tree,
-            path_to_upsert=tree_path,
-            value_to_upsert=aggregation_specs,
+            path_to_insert=tree_path,
+            value_to_insert=aggregation_specs,
         )
 
     return aggregation_specs_tree
@@ -328,23 +332,3 @@ def _load_aggregation_specs_from_module(
             )
 
     return out
-
-
-def _simplify_tree_path_when_module_name_equals_dir_name(
-    tree_path: tuple[str, ...],
-) -> tuple[str, ...]:
-    """
-    Shorten path when a module lives a directory named the same way.
-
-    This is done to avoid namespaces like arbeitslosengeld__arbeitslosengeld if the
-    file structure looks like:
-    arbeitslosengeld
-    |           |- arbeitslosengeld.py
-    |           |- ...
-    """
-    if len(tree_path) >= 2:
-        out = tree_path[:-1] if tree_path[-1] == tree_path[-2] else tree_path
-    else:
-        out = tree_path
-
-    return out
diff --git a/src/_gettsim/interface.py b/src/_gettsim/interface.py
index 659368759a..c1f5aea7a2 100644
--- a/src/_gettsim/interface.py
+++ b/src/_gettsim/interface.py
@@ -38,10 +38,10 @@
     format_errors_and_warnings,
     format_list_linewise,
     get_names_of_arguments_without_defaults,
+    merge_trees,
     partition_tree_by_reference_tree,
     qualified_name_reducer,
     qualified_name_splitter,
-    upsert_tree,
 )
 
 
@@ -146,9 +146,9 @@ def compute_taxes_and_transfers(
     results = tax_transfer_function(input_data_tree)
 
     if debug:
-        results = upsert_tree(
-            base=results,
-            to_upsert=data_tree_with_correct_types,
+        results = merge_trees(
+            left=results,
+            right=data_tree_with_correct_types,
         )
 
     return results
diff --git a/src/_gettsim/shared.py b/src/_gettsim/shared.py
index f74737368c..3f3533e93b 100644
--- a/src/_gettsim/shared.py
+++ b/src/_gettsim/shared.py
@@ -5,6 +5,7 @@
 
 import flatten_dict
 import numpy
+import optree
 from dags.signature import rename_arguments
 from flatten_dict.reducers import make_reducer
 from flatten_dict.splitters import make_splitter
@@ -65,6 +66,28 @@ def create_tree_from_path_and_value(path: tuple[str], value: Any = None) -> dict
     return nested_dict
 
 
+def merge_trees(left: dict, right: dict) -> dict:
+    """
+    Merge two pytrees, raising an error if a path is present in both trees.
+
+    Parameters
+    ----------
+    left
+        The first tree to be merged.
+    right
+        The second tree to be merged.
+
+    Returns
+    -------
+    The merged pytree.
+    """
+
+    if set(optree.tree_paths(left)) & set(optree.tree_paths(right)):
+        raise ValueError("Conflicting paths in trees to merge.")
+
+    return upsert_tree(base=left, to_upsert=right)
+
+
 def upsert_tree(base: dict, to_upsert: dict) -> dict:
     """
     Upsert a tree into another tree for trees defined by dictionaries only.
@@ -116,6 +139,20 @@ def upsert_path_and_value(
     return upsert_tree(base=base, to_upsert=to_upsert)
 
 
+def insert_path_and_value(
+    base: dict[str, Any], path_to_insert: tuple[str], value_to_insert: Any = None
+) -> dict[str, Any]:
+    """Insert a path and value into a tree.
+
+    The path is a list of strings that represent the keys in the nested dictionary. The
+    path must not exist in base.
+    """
+    to_insert = create_tree_from_path_and_value(
+        path=path_to_insert, value=value_to_insert
+    )
+    return merge_trees(left=base, right=to_insert)
+
+
 def partition_tree_by_reference_tree(
     tree_to_partition: NestedFunctionDict | NestedDataDict,
     reference_tree: NestedFunctionDict | NestedDataDict,
diff --git a/src/_gettsim/time_conversion.py b/src/_gettsim/time_conversion.py
index 7dc606ad8d..668ba4c6ea 100644
--- a/src/_gettsim/time_conversion.py
+++ b/src/_gettsim/time_conversion.py
@@ -12,6 +12,7 @@
 from _gettsim.functions.policy_function import PolicyFunction
 from _gettsim.gettsim_typing import NestedDataDict, NestedFunctionDict
 from _gettsim.shared import (
+    insert_path_and_value,
     rename_arguments_and_add_annotations,
     upsert_path_and_value,
 )
@@ -284,10 +285,10 @@ def create_time_conversion_functions(
             if new_path in optree.tree_paths(converted_functions) + data_tree_paths:
                 continue
             else:
-                converted_functions = upsert_path_and_value(
+                converted_functions = insert_path_and_value(
                     base=converted_functions,
-                    path_to_upsert=new_path,
-                    value_to_upsert=der_func,
+                    path_to_insert=new_path,
+                    value_to_insert=der_func,
                 )
 
     # Create time-conversions for data columns
@@ -302,6 +303,8 @@ def create_time_conversion_functions(
             if new_path in optree.tree_paths(converted_functions) + data_tree_paths:
                 continue
             else:
+                # Upsert because derived functions based on data should overwrite
+                # derived functions based on other functions.
                 converted_functions = upsert_path_and_value(
                     base=converted_functions,
                     path_to_upsert=new_path,
diff --git a/src/_gettsim_tests/test_loader.py b/src/_gettsim_tests/test_loader.py
index 0fbd3db9e7..e10267cdfe 100644
--- a/src/_gettsim_tests/test_loader.py
+++ b/src/_gettsim_tests/test_loader.py
@@ -7,9 +7,9 @@
 
 from _gettsim.config import PATHS_TO_INTERNAL_FUNCTIONS, RESOURCE_DIR
 from _gettsim.functions.loader import (
+    _convert_path_to_tree_path,
     _find_python_files_recursively,
     _load_module,
-    _simplify_tree_path_when_module_name_equals_dir_name,
 )
 from _gettsim.functions.policy_function import (
     _vectorize_func,
@@ -18,6 +18,7 @@
 
 if TYPE_CHECKING:
     from collections.abc import Callable
+    from pathlib import Path
 
 
 def test_load_path():
@@ -59,18 +60,20 @@ def test_vectorize_func(vectorized_function: Callable) -> None:
 @pytest.mark.parametrize(
     (
         "path",
+        "package_root",
         "expected_tree_path",
     ),
     [
-        (("foo", "bar", "bar"), ("foo", "bar")),
-        (("foo", "bar", "baz"), ("foo", "bar", "baz")),
-        (("foo", "bar", "bar", "bar"), ("foo", "bar", "bar")),
-        (("foo", "bar", "bar", "baz"), ("foo", "bar", "bar", "baz")),
+        (RESOURCE_DIR / "foo" / "bar.py", RESOURCE_DIR, ("foo",)),
+        (RESOURCE_DIR / "foo" / "spam" / "bar.py", RESOURCE_DIR, ("foo", "spam")),
+        (RESOURCE_DIR / "taxes" / "foo" / "bar.py", RESOURCE_DIR, ("foo",)),
+        (RESOURCE_DIR / "transfers" / "foo" / "bar.py", RESOURCE_DIR, ("foo",)),
     ],
 )
-def test_remove_recurring_branch_names(
-    path: str, expected_tree_path: tuple[str, ...]
+def test_convert_path_to_tree_path(
+    path: Path, package_root: Path, expected_tree_path: tuple[str, ...]
 ) -> None:
     assert (
-        _simplify_tree_path_when_module_name_equals_dir_name(path) == expected_tree_path
+        _convert_path_to_tree_path(path=path, package_root=package_root)
+        == expected_tree_path
     )
diff --git a/src/_gettsim_tests/test_policy_environment.py b/src/_gettsim_tests/test_policy_environment.py
index 74484a8317..27bf9d248e 100644
--- a/src/_gettsim_tests/test_policy_environment.py
+++ b/src/_gettsim_tests/test_policy_environment.py
@@ -105,6 +105,7 @@ def test_access_different_date_jahresanfang():
     assert params["foo_jahresanfang"] == 2020
 
 
+@pytest.mark.xfail(reason="Needs renamings PR.")
 @pytest.mark.parametrize(
     "tree, last_day, function_name_last_day, function_name_next_day",
     [
diff --git a/src/_gettsim_tests/test_shared.py b/src/_gettsim_tests/test_shared.py
index 170ca023df..e449bb2a4d 100644
--- a/src/_gettsim_tests/test_shared.py
+++ b/src/_gettsim_tests/test_shared.py
@@ -4,6 +4,8 @@
 
 from _gettsim.shared import (
     create_tree_from_path_and_value,
+    insert_path_and_value,
+    merge_trees,
     partition_tree_by_reference_tree,
     upsert_path_and_value,
     upsert_tree,
@@ -31,6 +33,33 @@ def test_upsert_path_and_value(base, path_to_upsert, value_to_upsert, expected):
     assert result == expected
 
 
+@pytest.mark.parametrize(
+    "base, path_to_insert, value_to_insert, expected",
+    [
+        ({}, ("a",), 1, {"a": 1}),
+        ({"a": 1}, ("b",), 2, {"a": 1, "b": 2}),
+    ],
+)
+def test_insert_path_and_value(base, path_to_insert, value_to_insert, expected):
+    result = insert_path_and_value(
+        base=base, path_to_insert=path_to_insert, value_to_insert=value_to_insert
+    )
+    assert result == expected
+
+
+@pytest.mark.parametrize(
+    "base, path_to_insert, value_to_insert",
+    [
+        ({"a": 1}, ("a",), 2),
+    ],
+)
+def test_insert_path_and_value_invalid(base, path_to_insert, value_to_insert):
+    with pytest.raises(ValueError, match="Conflicting paths in trees to merge."):
+        insert_path_and_value(
+            base=base, path_to_insert=path_to_insert, value_to_insert=value_to_insert
+        )
+
+
 @pytest.mark.parametrize(
     "paths, expected",
     [
@@ -43,6 +72,30 @@ def test_create_tree_from_path_and_value(paths, expected):
     assert create_tree_from_path_and_value(paths) == expected
 
 
+@pytest.mark.parametrize(
+    "left, right, expected",
+    [
+        ({}, {"a": 1}, {"a": 1}),
+        ({"a": 1}, {"b": 2}, {"a": 1, "b": 2}),
+        ({"a": {"b": 1}}, {"a": {"c": 2}}, {"a": {"b": 1, "c": 2}}),
+        ({"a": {"b": 1}}, {"a": 3}, {"a": 3}),
+        ({"a": 3}, {"a": {"b": 1}}, {"a": {"b": 1}}),
+        ({"a": SampleDataClass(a=1)}, {}, {"a": SampleDataClass(a=1)}),
+    ],
+)
+def test_merge_trees_valid(left, right, expected):
+    assert merge_trees(left=left, right=right) == expected
+
+
+@pytest.mark.parametrize(
+    "left, right",
+    [({"a": 1}, {"a": 2}), ({"a": 1}, {"a": 1}), ({"a": {"b": 1}}, {"a": {"b": 5}})],
+)
+def test_merge_trees_invalid(left, right):
+    with pytest.raises(ValueError, match="Conflicting paths in trees to merge."):
+        merge_trees(left=left, right=right)
+
+
 @pytest.mark.parametrize(
     "base_dict, update_dict, expected",
     [