I have 5 kids in my house, the youngest is only 3 1/2 and the oldest is 9. The oldest is a very bright and intuitive child so she has pretty much reasoned it out on her own. But I do not want it to be spolied for the littler ones. When she asked me if Santa was real, I simply told her this "He's real as long as YOU believe in him". This sounds crazy, I know but so far it has worked. I just explained that Santa is like magic, you have to believe in him for him to exist, and when you stop believing then he stops being real to YOU. But he can still be real to the younger ones who still believe in him. Of course, we have already read the story of Saint Nicholas and talked about his relation to Santa Claus and the act of giving gifts. Even after all of this, the 9 year old still gets excited about Christmas and can't wait for "Santa" to come and leave her gifts. I guess she still wants to believe in him, so I let her.
I wanted to add one more thing, for all those who say Santa is a lie, or that it's wrong to teach our kids these things. Santa is REAL, very REAL. And here's what I mean: Organizations out there like "Toys for Tots" who collect Christmas gifts for needy children. Should the parents tell their children sorry, but we don't have any money or we're struggling so you don't get anything? Should they take responsibility for the gifts and say they are from Mama and Daddy? In my opinion Santa is a very fitting explanation. In my opinion these people are acting in the same good faith and spirit of giving that Saint Nicholas himself began. For these kids, Santa IS real. And even though not every child receives gifts from an "anonymous" giver, it is that same ideal that we should instill in our children. Even if Santa no longer comes to visit them when they are older, they can still be Santa to someone else. Isn't that the whole meaning behind the legacy of Santa? I think the more important issue is that we shouldn't just teach our children how to receive from Santa, but how to BE Santa as well. Just food for thought...