I think what you do totally depends on the real relationship you have with this person and what you want to communicate...or don't want to communicate.
You know this family member, so if she is toxic and you have an inkling that the gift is just a way for her to drag you back in so she can continue to be toxic, then do whatever you want with the card...short of sending it back/contacting her.
If this is more of a situation where you two just clash and argue and have just sort of mutually backed off, then it's possible the gift was her offering you an olive branch. If you want to communicate to her that your relationship is not one where you exchange or accept expensive gifts from each other, but that it is one where you continue to communicate and build your relationship, then send it back with a short "thank you but this gift is more generous than I can accept at this time and I'm not comfortable taking it."
If this gift is an "I'm sorry" and you're willing to accept the apology and move on (doesn't seem so from your OP), then send her a thank you and leave it at that. You don't have to reciprocate every act of generosity immediately upon receiving them or in the exact same manner.
But yeah, if you truly have cut her from your life and want to keep it that way, then don't send the card back. Use it, donate it to charity, give it to someone else...whatever you want, but don't contact her about it.