The secret of santa explanation from mom and dad. My mom told me something very similar when I "discovered". I'll of course add a part about looking for the red tinted star on Christmas eve, the spirit of Santa and all :)
Write a letter to your child or grandchild each year and include money for grad gift. I like this idea of writing a letter, and even adding money, but I think it'd be better to go longer than a grad gift. Wedding, first home, first child?