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1. Is the existing wood in good shape? If not, REMOVE IT!!!!
2. If you leave it on, will the J-channel on the new siding stick out past the window/door trim? If so, you will then have to build it out, and wrap it in aluminum trim coil, which is not easy for a homeowner.
What I am trying to say is, "It may be a bit more work, but in most cases removing it will be easier in the long run."