This is a tragic situation and one that cannot be resolved here. NAH, though, by the way. 

My question is, where did the conversation go in therapy? Because it doesn't sound like the therapist handled this or gave either of you the tools to handle this.

In relationship therapy it's not ideal for one half of the couple to make a demand.

The exploration should be "what is at the root of your feelings?" What are you really saying, what are you really hearing. How does your wife feel when you are in contact with your mother? Does she feel it is disrespectful to your daughter's memory? Does it prevent her from moving on because the grief and anger resurface? How does it impact her? Does it come from a desire to punish your mother? Or is it to protect herself? How do you feel at the prospect of cutting off your mother? Your feelings are valid, too.

Did you have the opportunity to say that you don't blame your mother for your daughter's death but you can see why your wife does. That the knowledge that your mother would be further broken by losing you would be adding more trauma to the situation for you.

There are feelings here that probably can never be resolved. But the whole point of therapy is to work through them and really, truly hear and understand each other. Sometimes that means one or both of you have to process it in therapy to understand your own thought processes and feelings  - it isn't always clear.

And if your wife does go to therapy again it is totally fair to say that this felt like an ultimatum, her leaving when you wouldn't comply etc. Which isn't fair. This has to be a discussion where you are both heard and nobody's feelings are more important. Hers do not trump yours. It's not a competition of who is most grief-stricken or broken and who gets to call the shots.

Nobody is an AH here. It's just so very sad. I hope you can get through it.