I think you can proudly tell your children that Santa Claus is real; without lying. Santa IS real...he lives in our hearts at Christmas and makes us want to be kind to each other. Santa is the embodiment of the spirit of Christmas, and it is that Christmas spirit that gives gifts to people we care about. Your 5-year old is right...Santa is going to bring her presents - the Santa that lives in your hearts. I know, this all sounds mushy and sentimental, but isn't that what this time of year is all about?? When my eldest was small I went all out to keep her believing in Santa and when she got older and started to doubt I told her about Santa living in our hearts rather than being a real person...she sat and thought a moment and said "yes, I feel him; it feels nice". She's 20 now and still believes at least a little in 'Santa'. I'm going to do the same thing with my 3-year-old, and never once have or will I consider myself a liar.