Mother-in-law ruins Disneyland vacation for 8-year-old, mom considers cutting her off despite losing inheritance: 'I had a feeling I would regret it'

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Walt Disney and Mickey Mouse statue at Disneyland Orlando.

Am I wrong for wanting to cut my MIL off after she ruined our family vacation and repeatedly targeted my 8-year-old?

1 (34F) have always had a tense relationship with my MIL because of the way she treats my husband (41M). She constantly talks down to him, acts like everything he says is stupid, and corrects him even when she's wrong. I've never been afraid to stand up for him, which has definitely caused tension between us.
Fast-forward to our recent "family vacation." We have two kids, an 11-year-old son and an 8-year-old daughter. We won a $3,000 travel voucher through a travel agent and decided we wanted to use it toward taking our kids to Disneyland and Universal. Since we live thousands of miles away, $3,000 obviously wasn't going to cover the entire trip.
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My MIL offered to pay the remaining cost if she could come with us. We desperately wanted our kids to have this experience, so we agreed. I had a feeling I would regret it. I was right.
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Things started to go wrong very quickly.

Throughout the entire trip, MIL talked down to my husband and very obviously favored our son over our daughter. If my daughter got nervous about a ride, became emotional, or was simply exhausted from walking all day, MIL would mutter things like "Jeis Chr_t" or "shut up" under her breath. Except she wasn't exactly quiet about it. My daughter heard her.
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Meanwhile, when my son said he was scared to go on a ride, MIL stayed behind with him, comforted him, and reassured him that it was okay. The difference in how she treated them was so obvious that eventually my 8- year-old asked me: "Why does Grandma hate me so much?"
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That absolutely broke my heart. I told her, "She doesn't hate you. She hates herself. This has nothing to do with you." Things got even worse when we finally made it to Bluey, which my daughter LOVES. Unfortunately, the show wasn't running that day, so I told her we could pick something out at the Bluey gift shop instead.
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She wasn't going to back down.

Every time my daughter looked at something, MIL would immediately say things like, "Not that. That's just garbage." My daughter started crying. I finally snapped and asked MIL, "Are you her mother? No? Then mind your business."
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Even the employee gave me a look like, "Good for you." But the damage was already done. My daughter was heartbroken. Then came the moment that completely pushed us over the edge. We were standing in line for a ride when someone accidentally bumped into us with a stroller. They immediately apologized in Spanish.
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My MIL loudly responded: "This is why I support My husband and I were MORTIFIED.
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An older woman sits in a chair while rubbing her temple, with a cane next to her.

The pressure was mounting during the vacation.

We immediately apologized for her behavior and actually left the line because we wanted to get away from her. MIL then started insisting that she hadn't done anything wrong and reminding us that she had paid for the trip. My husband finally lost it and told her to STFU.
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From that point on, she spent the rest of the vacation throwing herself a giant pity party about how nobody likes her, everyone is mean to her, etc.
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By the end of the trip, I was exhausted. Between the racism, swearing, constant negativity, the way she treated my husband, and—most importantly—the way she treated my daughter, what was supposed to be an incredible memory for our kids had become incredibly stressful.
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The ordeal was nearly over.

When we finally got home, my parents picked us up from the airport. Our kids immediately ran to them and hugged them. MIL scoffed, got upset, and didn't even say goodbye. I told my husband afterward that I'm done.
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I don't want a relationship with his mother anymore, and I especially don't want my daughter growing up around someone who treats her badly enough that, at EIGHT YEARS OLD, she's already asking why her grandmother hates her. Here's where it gets complicated.
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We've threatened to cut MIL off before, and her response is always that she'll donate all of her assets to charity when she dies so my husband and our children "won't get a cent." Some of that money/assets originally came from his grandparents and was intended to eventually benefit the family.
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The husband still wanted the money.

Personally, I don't care about the money. At this point, no amount of inheritance is worth letting someone treat my husband and children this way. My husband doesn't want to completely cut her off, partly because he wants anything he eventually inherits to go toward giving our kids the best possible start in life-college, their futures, etc.
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But after this trip, I feel like we've reached the point where continuing a relationship with her for the possibility of an inheritance is doing more harm than good.
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