Personally, i wouldn't tell unless he straight out asked me 'is he real or not' then i think they have that doubt in their mind and so are ready to know the truth. I found out by myself at around age 7 when i went snooping about. But i still liked to believe in the magic of it all. Even though i 'knew' he wasn't real i still got presents signed from 'santa' etc. Maybe it was because i was younger and an only child, i'm not sure. But i love that Lily is now at an age where she mostly understands us telling her about Santa, it's exciting!